At yesterday’s Aberdeen crackerbarrel, Sister Myra Remily asked our legislators about House Bill 1161, the payday lending industry’s fourth dirty trick to evade South Dakotans’ effort to cap short-term interest rates at 36%. Rep. Al Novstrup (R-3/Aberdeen) showed he’s no loan-shark dupe: he calls the payday lenders on their trickery and says “there’s a high chance” that he won’t vote for HB 1161:
Rep. Novstrup misanticipates when and where HB 1161 will come to him: it passed House State Affairs last Wednesday, was deferred in the House Friday, and is headed for Al and the House again tomorrow after the second sales-tax-for-teacher-pay debate.
But Rep. Novstrup nails exactly the problem with HB 1161: the payday lenders are trying to scoot their regulations into a new, separate chapter of state law, which would “exempt[…] themselves from whatever you’re going to vote on next fall.” Rep. Novstrup calls that “loophole to drive trucks through” “very problematic.”
Then, at 2:55, Rep. Novstrup wales on the payday lenders even harder and gives this remarkable condemnation of Amendment U, the fake 18% rate cap:
There’s some sincere people that have put a ballot issue out that says you cannot charge more than 36%. Then there’s other people that have put out an 18%. That’s put out by the industry in an attempt to confuse and defeat the other issue. So the 18% is actually what they call a decoy…. When you have a chance to vote next year, there’s an 18% and a 36%. Normally you say, “Well, I think we’ll go with an 18% interest rate.” The answer’s just the opposite from what you’d expect. The reason the 18 is a fraud is because it says no lender in South Dakota can charge more than 18% unless the person getting the loan signs an agreement to that effect. So if you want the loan you have to sign an agreement to that effect and the law doesn’t mean anything [Rep. Al Novstrup, Aberdeen crackerbarrel, 2016.02.20].
Steve! Steve! Reynold! Did you hear that? Al didn’t say he’ll vote for IM 21, but he called you guys sincere!
More importantly, Republican Representative Al Novstrup used the words decoy and fraud to describe the 18% rate cap. Al says it’s fake, I say it’s fake, and from the immediate audience response when Al explained Amendment U’s written-agreement loophole, voters appear to recognize that Amendment U is a fake.
Rep. Novstrup says Sister Myra’s position appears to be correct, but he still qualifies his opposition to the payday lenders’ tricks, saying there’s a “99% chance I’m with you” on HB 1161 (and perhaps by extension on Amendment U), but he says he still wants to hear the debate to make sure he hasn’t misunderstood the bill.
Senator David Novstrup (R-3/Aberdeen) says he declined lobbyists’ invitation to sponsor HB 1161 “because of the concerns of the ballot issues.” We can only assume those concerns are those his dad enunciated more clearly for him at the mic. David said he’s waiting to see if HB 1161 makes it out of the House to study it and decide his position.