Payday lenders will have to keep a unified statewide database under a bill passed during the session. Under the existing law, payday lenders may lend only $500 to a single borrower, and no borrower may have greater than $500 worth of payday loans at any one time. That sounds good in theory, but without a unified statewide database, that restriction has been totally unenforceable. As a result, tremendous numbers of individuals have been trapped in revolving debts. The bill’s sponsor, Rep. Patricia Todd, D-Birmingham, worked hard to get this bill passed and she is to be commended.
The bill that passed was a compromise from a previous version that would also have capped interest rates on payday loans. Rep. Todd thanked Alabama House Speaker Mike Hubbard for helping all the parties reach a compromise in the House. She had this to say about the new law:
It’s a first step. We will have data now instead of relying on the industry to give us that data, and we’ll be able to see how many people are served, how many they get per year, how long it takes them to pay it off.
While this new law does not solve the real problem, I agree with Rep. Todd that at least it’s a step in the right direction. Frankly, I have great difficulty in comprehending how any member of the House or Senate could support the payday lending industry. I have to wonder what really motivates any legislator who would be a party to allowing payday lenders to change interest rates that are in the 400 percent range and to keeping families in debt with little hope of escaping the trap they are in. Hopefully, things will change in due time so that real reform will have a chance to pass in Alabama and become law.
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