Payday lender donations at issue in attorney general race

By Joe Hanel
The Durango Herald

DENVER – A Democratic candidate for attorney general has charged that the payday lending industry might be improperly influencing rules for the high-interest loans.

Attorney general candidate Stan Garnett says campaign contributions to incumbent John Suthers, a Republican, are suspicious because they happened while Suthers' office is writing new rules for the industry.

"Coincidence? You decide, and then decide who you want as your attorney general," Garnett said in an online video he released Thursday.

Suthers' office released the draft rules for public comment last week. The office will conduct a public hearing Aug. 31 to determine the final rules, which the Legislature would have to approve next year.

Deputy Attorney General Geoff Blue welcomed criticism of the rules in order to make them better.

"That's the whole point of the rule-making process, that somebody can come in and challenge things if you're wrong," Blue said. "If we have to fix it, we'll fix it."

But as of Thursday, no one had sent a critique of the rules to Suthers' office, said his spokesman, Mike Saccone. However, the office is expecting comments from the Bell Policy Institute, a group that pushed for changes to the payday loan law.

The deadline to submit written comments is Monday.

No one outside the Garnett campaign will say specifically how the proposed rules tilt toward the payday loan industry, said Andrew Cole, spokesman for Suthers' campaign.

"Our case rests mostly in the facts," Cole said. "It's a politically motivated attack. Stan's perspective on the issue ought to speak for itself."

Suthers did not personally intervene in the rules written by attorneys in his office, Cole said.

The controversy extends from a bill the Legislature passed this spring, House Bill 1351, which limited interest and fees for the payday loan industry. The bill told the attorney general's office to write new rules on how the law will be enforced.

Metro Organizations for People, a proponent of the bill, referred questions to Toby Serrano, an auto mechanic who testified for HB 1351 after he got caught in a debt cycle from his payday loan.

Serrano ended up paying $700 in interest and fees on the $400 loan he took out to get his electricity turned back on. When his loan came due every two weeks, he had two options: pay off the $480 he owed in principal and fees, or take out a new loan with more fees.

"If I had $480 to pay back, I probably wouldn't have needed the loan to begin with," Serrano said.

He said he was disappointed that Suthers accepted contributions while his office was writing the rules, but Serrano could not point to specific ways in which the proposed rules were weakened.

HB 1351 sought to help people like Serrano by requiring minimum loan terms of six months, with no penalty for early repayment. Garnett's campaign analyzed the proposed rules and found that subtle wording changes could allow payday lenders to collect more fees.

Blue, however, said the proposed rules attempt to follow the direction of HB 1351.

"I'm pretty sure the fees that are allowed are what's in the bill," Blue said. "This is a very, very poorly written bill."

Senate Democrats gave the bill a major rewrite near the end of the legislative session in order to gain enough votes for it to pass.

Garnett's campaign this week released a list of nearly $9,000 in donations to Suthers' campaign from 11 donors who have ties to the payday loan industry.

In addition, the registered agent for Suthers' campaign, Jason Dunn, is a lobbyist whose clients include Ace Cash Express.

Campaign-finance records show that five of the payday lender donors to Suthers also made political contributions to Democratic legislators in the last year.

Seven Democrats voted against HB 1351, and four of them – Reps. Debbie Benefield, Joe Rice and Jim Riesberg and Sen. Lois Tochtrop – took donations in the last year from at least one of the same payday lenders who gave to Suthers.

Republicans in the Legislature all voted against HB 1351.

jhanel@durango herald.com