Bill to curb high-cost lenders falters

Attempts by lawmakers to run low-dollar, high-cost lenders out of the state fell flat in the House on Tuesday.

For the second time in a week, Senate Bill 658 failed to get the support from a majority of the 100-member House. The vote Tuesday was 48-18.

Sen. Jason Rapert, R-Bigelow, proposed the legislation to count fees as part of the interest for loans. The measure is aimed at operations like CashMax, which provides installment loans up to $1,000.

The sponsor of the legislation in the lower chamber, Rep. Doug House, R- North Little Rock, said the current law is intended to prevent operations like CashMax, though the business is operating under the loophole of high fees.

"It's loan-sharking plain and simple," House said.

While the Arkansas Constitution caps interest rates at 17 percent, CashMax stores in Hope and North Little Rock charge up to 280 percent interest, as calculated by the company under the federal Truth in Lending Act guidelines, by charging fees that the owners say do not count as interest.

As House put it, "what these folks are doing is they prey on the ignorance of people."

Staff members for Attorney General Leslie Rutledge have said they're investigating complaints about the businesses, but her office has been otherwise silent on the issue.

Opponents of the measure argue that if there is a demand for the services, it would be wrong to pull the rug out from under those consumers.

Rep. Michelle Gray, R-Melbourne, said she's proposed other measures that would keep credit services organizations "in between the railroad ties." After her legislation, House Bill 1958, failed to get traction, Gray said she's adapted it into an interim study that will help lawmakers come up with another solution in two years.

Metro on 03/29/2017

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