INDIANAPOLIS – Stakeholders largely repeated the same arguments over predatory lending Thursday at a summer committee on the consumer credit code.
But one new suggestion arose – requiring payday lenders to file more information to be publicly disseminated.
The recommendation came from Lyndsay Miller, general counsel and acting deputy director of consumer credit for the Indiana Department of Financial Institutions.
She said it has been done in a number of other states and compared it to call reports that mortgage companies are required to file.
Miller said the agency would compile and publish a report that would help consumers and lawmakers more fully understand the landscape of payday lending in Indiana.
“Data is what we are all using to inform regulatory points of view,” she said.
Rep. Woody Burton, R-Greenwood, seemed open to the idea, saying it would provide oversight that doesn't exist now.
The data could also help as the General Assembly is set to battle over subprime lending for the fourth year in a row.
Supporters have proposed legislation establishing several new lending products for Hoosiers who don't have high enough credit scores to obtain traditional loans. The new options would have lower rates than payday loans at 391% but would last longer and allow higher dollar amounts to be borrowed.
Social service groups, veterans and faith groups have banded together against the efforts, saying it encourages criminal loansharking.
Erin Macey, senior policy analyst for the Indiana Institute for Working Families, said the profit model of predatory lending is that borrowers repeat the cycle and ultimately get stuck in a debt loop.
Fort Wayne GOP Rep. Martin Carbaugh, said lawmakers want to find a way to provide regulated products for people who need them in tough times. And they want them to be temporary and help build credit.
“We aren't heartless,” he said. “I am interested in protecting those who may get hurt. ... But we need a little more at the table discussion and not just a 'no.'”
Christopher Peterson, a professor from the University of Utah School of Law who has studied the lending industry for years, said he sees that Carbaugh and others care but said different lending schemes are simply shell games. Many are urging lawmakers to limit interest rates to 36%.
“If you can invent a new bucket I'll be your biggest fan,” he said. “But I'm skeptical.”
Those speaking on behalf of the payday industry said a 36% cap would essentially put them out of business – as has happened in other states.
“Don't pretend to think someone is going to fill that void. You can't make any money on it,” said Brian Burdick, lobbyist for several large payday lenders in the state. “That's the economic reality.”
The committee might make recommendations later this summer for the 2020 legislative session.