Payday lending

In 2010, Colorado passed a bill that ensured borrowers would have a six-month payback period. The fees were still high, but the reforms eliminated the two-week, triple-digit loans that trapped so many borrowers.

At the end of the 2011 legislative session, a last-minute effort was made to change the annual rules-review bill – usually treated as procedural housekeeping legislation – and thereby undo 2010's reforms. That led to a showdown between the House and Senate, but the effort was defeated.

Before the reforms, predatory payday lending cost Colorado consumers tens of millions of dollars a year in stripped home equity and excessive interest. It also trapped families in a devastating cycle of debt.  Colorado had lax standards for the payday loan industry and for loosely regulating mortgage brokers who cater to borrowers with spotty credit histories. Fortunately, the most effective solutions to predatory lending come at the state level.

Emails tracking effort to reform payday lending, 2009-2011

From the Bell and the Center for Policy Entrepreneurship:
The Truth About Payday Lending: How hardworking Coloradans take the bait and get caught in a cycle of debt
Feb. 13, 2008
This report, produced with the Center for Policy Entrepreneurship, focuses on payday lending in Colorado and analyzes data from the Colorado Attorney General’s offi ce, which licenses and regulates the payday lending industry. The report demonstrates that instead of one-time emergency loans, payday loans cause a downward spiral of long-term debt that borrowers cannot easily escape. The Bell, CPE and a broad-based coalition of interest groups worked with lawmakers on House Bill 1310, designed to reform payday lending in Colorado.

Of note: The Bell and its coalition featured prominently in news and editorial coverage of HB 1310:
Boulder Daily Camera editorial
Denver Post editorial
Denver Post editorial (No. 2)
Al Lewis column in The Denver Post
Durango Herald editorial
News story in Greeley Tribune
Greeley Tribune editorial
Point/Counterpoint in Rocky Mountain News
News story in Rocky Mountain News
Also, Mile High United Way blog entry

From the Oregon Center for Public Policy:
Analysis Shows One in Eight Low-Income Oregon Adults Pay Fees to Unregulated Check Cashers
Nine percent of payday loans are made over the internet
Feb. 7, 2007
The OCPP’s analysis concludes that about 100,000 Oregon adults with household incomes under $30,000 paid a fee to cash a check in the year prior to responding to the survey, conducted primarily in the summer of 2006. National data indicate that nine in ten customers of cash checking outfits visit the stores at least once a month.

From the Washington State Budget & Policy Center:
High Interest, Lost Opportunity: Payday Lending in Washington State
Jan. 31, 2007
Basic financial services available to lower income families, such as cashing checks and short-term loans, often come with interest rates that soar well above 300 percent. Analyzing data compiled by the Brookings Institution, the Budget & Policy Center’s new policy brief offers information that can guide policymakers considering comprehensive reforms designed to allow lower income families greater access to reasonably priced financial services. Maps of Washington's legislative districts incorporate neighborhood income data, show the locations of payday lenders as well as bank and credit unions, and show the amount of money consumers could have saved if alternative products had been offered.
Of note: Washington state is the home of Starbucks coffee shops, but payday lending stores outnumber Starbucks, 716 to 585!

Blueprint Implementation Memo - Crack down on predatory lending. Jan. 11, 2007

Blueprint Brief - Protect Colorado consumers from predatory lending, Aug. 22, 2006