Director Bret Afdahl said, “The Division of Banking is investigating the matter. The investigation is similar to our regular examination process. The Division sends a list of documents we want to review and goes onsite to review them. In addition, the Division will review the terms of the product in conjunction with Chapter 54-4 to make a determination regarding the product for compliance with South Dakota law. Those findings will be communicated to the company.”
Additional information will be released when publicly available [South Dakota Department of Labor & Regulation, Division of Banking, press release, 2017.07.11].
For the purposes of § 54-4-44 for all loans, late fees, return check fees, and attorney’s fees incurred upon consumer default are not fees “incident to the extension of credit.”
That statute came into effect July 1; Brennan started offering his one-week loans right afterward. And somehow we let the Legislature pass this change unanimously to let Brennan come back in to exploit South Dakotans. Aaarrrggghhh!
One carcass bill that had set off my 36% alarm is House Bill 1175, introduced by Representative Tim Rounds (R-24/Pierre) to “revise the method of establishing certain interest rates.” The original placeholder text gave no other information; however, an amendment passed Monday signals that Rep. Rounds is changing interest rates for damages in court cases, not consumer rates.
Right now, individuals winning damages in court in contract disputes get “prejudgment interest,” calculated on rates specified in the contract or, absent such contractual provision, the state’s Category B rate of 10%. HB 1175 as amended would change the interest when not specified by contract to the prime rate plus 3%.
Today’s bank prime loan rate from the Fed is 3.75%, so in the current monetary climate, HB 1175 represents a ding on damages. On $100,000 in damages incurred five years ago, 10% earns $24,700 more than 6.75% interest.
Rep. Rounds should explain why he wants to lower damages on contract lawsuits today in House Commerce and Energy at 10 a.m. He’ll also get to explain his House Bill 1090, which does directly tinker with the 36% rate cap by removing “installment sales contracts” from the definition of “loan,” creating the possibility that a creative payday lender could redefine his products to evade the cap. Keep an eye on who shows up to testify on that bill this morning.
But the South Dakota Legislature’s effort to strip voters of their constitutional right to legislate and make Pierre the sole lawmaking authority is not limited to fast-tracked House Bill 1069. Here is the list of bills filed so far that either tinker with voter-approved laws or revise petition and election law to weaken voter power. I mark in red the worst bills, those that definitely deserve a NO vote.
Tinkering with Voter-Approved Laws:
HB 1069: An Act to repeal and revise certain provisions related to campaign finance and to declare an emergency.
Intent: Repeal IM22’s $100 limit on gifts from lobbyists to lawmakers and immediate family and replace it with a soft $100 cap on gifts riddled with exceptions (including all those free meals on the Legislative Social Calendar).
HB 1175: “An Act to revise the method of establishing certain interest rates.”
Originally a carcass bill, HB 1175’s title suggested possible tinkering with the 36% rate cap on payday lending. An amendment offered Monday, Feb. 13, showed the bill targets the interest rates used to figure damages in court cases. No harm, no foul.
SB 131: An Act to revise certain provisions concerning the period of time elected officials are prohibited from lobbying after leaving office.
Intent: now nearly replicates IM 22 Section 65 lobbyist revolving-door limits; originally offered a significantly weaker replacement. Forbids any “No elected officer, department or agency head, or division director, or the highest paid employee reporting to such person” from lobbying for two years after leaving government service.
HB 1034: An Act to establish certain fees for receiving electronic files of petitions, to revise certain provisions concerning filing petitions and other documents, and to revise certain provisions concerning elections and voting.
Intent: mixed bag!
On the bad side, HB 1034 strikes the Secretary of State’s obligation to include Pro and Con statements from interested parties on the official state ballot question pamphlet. While these Pro/Con statements can include utter bushwah, they are also one opportunity for honest, low-budget grassroots campaigns to reach every voter in the state with a few paragraphs explaining their measure.
On the good side, HB 1034 improves openness by establishing fixed, affordable fees for obtaining copies of petitions that citizens can review for fraud and grounds for challenges.
HB 1074: An Act to provide for limits on certain out-of-state contributions to ballot question committees.
Attacking: funding for ballot measure campaigns.
Intent: Amended to cap contributions from out-of-state residents to ballot question committees to $100,000; originally imposed an unworkable and unconstitutional limit on out-of-state contributions to ballot question committees.
SB 77: An Act to provide for a fiscal note for any initiated measure or initiated amendment to the Constitution that would have a fiscal impact on the state.
Attacking: initiative process.
Further delay circulation of initiative petitions by making sponsors wait for Legislative Research Council to complete a fiscal analysis;
Make it harder to circulate initiative petitions by requiring circulators to “provide notice to any person who signs the petition that the initiated measure or initiated amendment to the Constitution may have an impact on revenues, expenditures, or fiscal liability of the state or its agencies and subdivisions”;
Deter voters by cluttering ballot with fiscal impact statement; committee amendment limits statement to 50 words.
SJR 2: A Joint Resolution proposing and submitting to the electors at the next general election amendments to Article XXIII, of the Constitution of the State of South Dakota, relating to amendments to the Constitution.
Attacking: process of passing constitutional amendments.
Raise the vote required for the Legislature to put a constitutional amendment to a public vote from simple majority to two thirds of each chamber;
Raise the vote required by the public to amend the constitution from simple majority to 60%.
There a couple faintly pro-democracy measures in the hopper. One such exception to the Legislature’s anti-democratic rampage: Senator Stace Nelson has proposed a constitutional amendment that may increase voter power a smidgeon. Senate Joint Resolution 1 would put on the 2018 ballot an amendment to make the Secretary of Veterans Affairs an elected office instead of a gubernatorial appointment.
SB 171 would create a task force to study “government, campaign finance, lobbyist restrictions, and ethics,” the subjects of IM 22. (Status: passed Senate, referred to House State Affairs.)
I’m no fan of task forces, but I would prefer to see killed all of the above proposals on I&R and perhaps all of the “replacement” bills offered to compensate for the Legislature’s hasty repeal of IM 22 in favor of empaneling these task forces and conducting public hearings statewide to give voters another chance to tell legislators what they really want.