reform

By Dr. Robin Baker
Senior policy analyst and director of the health project
baker@thebell.org

Having trouble sorting out the details in the debate over health care reform?

You're not alone. That's why we've compiled some resources we think you might find useful:

· To help explain the issues surrounding reform efforts, two news organizations have developed helpful features.

Sponsors of House Bill 1310, a bill that in its original form would have protected Coloradans from predatory lending, said today they will kill the legislation.

This report analyzes data from the Colorado attorney general and explains how payday lending harms working families. The report explores other options and shows that other states and the Department of Defense have applied restrictions to make the loans more fair.

The payday lending folks have been working hard to defeat a bill in the state legislature that would cap their industry's annual interest rate at 45 percent and limit fees. Who could blame them? Their cash cow is in peril of being neutered and they're packing hearings at the Capitol in an effort to derail the measure. ...

Experts analyzing the subprime mortgage crisis have assessed some of the blame for the situation on predatory lenders who mislead borrowers into committing themselves to loans they could not afford. Low introductory interest rates gave way to ballooning fees, leaving borrowers in uncomfortable or unsustainable financial positions. That unscrupulous behavior is nothing compared to that of payday lenders.

Back in 2000, the Colorado legislature gave a valuable gift to an industry that specializes in short-term loans. Lawmakers exempted so-called payday lenders from state laws capping interest rates at 45 percent. Payday lending operations exploded in Colorado, and today they charge customers, primarily the working poor, annual interest rates of about 350 percent. ...

To those who have never been poor, or never empathized with a poor person, the rhetoric of the payday-lending industry might sound convincing. Yes, the payday-lenders admit, some borrowers can't make their payments. But, they argue, that doesn't mean payday loans should be capped at 45 percent. ...

Think lending money at 353 percent should be legal? What about charging $500 to borrow $300? This is not only legal in Colorado, it happens every day. It's called payday lending, and it's sending Coloradans into a cycle of longterm debt, taking $76 million a year out of our economy. Here's how it works: ...

A bill before the Colorado legislature would limit the interest and fees payday lending businesses can charge residents. House Bill 1310, which narrowly passed the house in February, would limit the annual interest rate on short-term loans the businesses provide borrowers to 45 percent. It would also limit lenders to assessing only one $60 finance fee per borrower per year. ...

News article on House Bill 1310, with quotes from Rich Jones.