Is Rep. Kris Langer (R-25/Dell Rapids) the latest dupe for the payday lenders? Her House Bill 1161 sure makes her look like one.
HB 1161 is a 45-section unpleasantry adding numerous regulations to South Dakota’s lending laws. It exempts state and national banks, South Dakota trust companies, bank holding companies, and any other FDIC-insured institutions, meaning it, like Initiated Measure 21, the real 36% rate cap, targets short-term lenders. HB 1161 spins a lot of ink codifying what you’d think is already obvious: lenders can extend a consumer line of credit, they may charge interest and fees, customers have to pay by the due date…
…and then tucked in Section 6 is this landmine:
In addition to periodic interest, a licensee may also charge and collect a periodic fee for the inspection, verification, processing, and protection of collateral and establishment, perfection, and release of any security interest. The periodic fee is not deemed to be interest for any purpose of law [Section 6, House Bill 1161, introduced 2016.01.28].
Review the key text of IM 21, which we get to vote on this November:
…no licensee may contract for or receive finance charges in excess of an annual rate of thirty-six percent, including all charges for any ancillary product or service and any other charge or fee incident to the extension of credit. A violation of this section is a Class 1 misdemeanor. Any loan made in violation of this section is void and uncollectible as to any principal, fee, interest, or charge [excerpt, Initiated Measure 21, submitted 2015.07.07].
Oh, the ambiguity! IM 21 caps payday loan “finance charges” at 36% and specifies that the cap includes all other charges and fees related to the loan. Yet House Bill 1161 defines a separate fee that is not to be considered “interest” for any purpose of law.
Looking at the text of HB 1161 and IM 21, I would think the language of IM 21 would still include HB 1161’s periodic inspection/processing fee as a charge “incident to the extension of credit.” But then I like IM 21. The payday lenders may be setting up a devious legal trap to tangle enforcement of IM 21 if it passes.
More trappage may lie in Section 43 of the bill. That part of HB 1161 says that “No licensee licensed pursuant to this Act is subject to the provisions or requirements of chapter 54-4.” IM 21 puts the 36% rate cap in Chapter 54-4. Hmmmmm….
Rep. Langer and two other sponsors—Rep. Roger Solum (R-5/Watertown) and Rep. Tim Rounds (R-24/Pierre) fell for propaganda from North American Title Loan and other usurers back in 2014 when they voted to kill HB 1255, the bill Rep. Steve Hickey proposed to curb payday lenders’ abuses. The defeat of that bill prompted Hickey to sponsor the 36% rate cap petition, which North American Title Loan’s owner Rod Aycox has spent $2.1 million so far to oppose.
HB 1161 is supposed to go to House State Affairs, but it hasn’t been scheduled for two weeks. As we wait for the hearing, let’s ask the sponsors who brought them this bill and what impact they think it will have on the payday loan rate caps we’re being asked to vote on in November. If their eyes get shifty and the answer is unclear, or if they straight-up tell us HB 1161 insulates payday lenders from the 36% rate cap, then we need to kill this bill now and let the people decide in November, not sneaky lobbied legislators in February, what to do about predatory lending in South Dakota.
Much appreciated and Cory is first to the story. This is precisely what is going on and I’m already aware that some cosponsors of the bill had no idea. Quite disingenuous to pitch an enormously controversial and slimy legislative trick on unsuspecting colleagues. This bill needs to die a quick death and all who read this can help make that happen by contacting the members of the House State Affairs Committee ASAP. I hope other media outlets ask the sponsors the hard questions about the origins of this bill.
Another dot to be connected. The loan shark industry has many very long tentacles and Kris Langer is just another lost soul who is ignorant of what a legislator is supposed to do in Pierre.
After all the great food and fun Rod has provided, the poor thing is just confused. What to do?
90, 96, has anyone seen Rod Aycox or Erin Ageton in Pierre this Session? Or will Brett Koenecke and Doug Abraham handle all of North American Title Loans’ lobbying?
According to the SOS lobbyist database…
Nine lobbyists can shake a lot of hands and jaw a lot of bones.
I would love to have her explain the jest of the bill in person to people. She is just another legislator carrying the water for outside groups and doesn’t understand the ramifications of what she is doing!!!
Mr Solberg,I believe you meant explain the gist of the bill,because there is no humor in it.(jest) No offense. :)
SCHOOF, SUSAN M
Total Given to Date: $200 (1 records)
Contributor Type: Individual
Address: MIDDLETON, WI
Employers Listed: ADVANCE AMERICA
Occupations Listed: DIRECTOR OF GOVERNMENT AFFAIRS
Director of gubmint affairs-sounds like the type of person William Jefferson Clinton needed to keep his affairs straight while in the WH.
Darrell, you are right on. Put those sponsors on the stage and ask them for answers and expect a blank stare.
How about an interview with the sponsors, Cory?
Cory, please give us specific details of who and how we should contact to voice our opposition to HB1161. This must be stopped before ignorant legislators pass such a bill. Why is this even business on the floor of the Capitol? This bill has no purpose except to make payday loaners richer and borrowers poorer. Thanks for the information.
CraigSK, start with House State Affairs (click here to see members). Prime sponsor Langer and co-sponsor Solum are on that committee; start with them. Langer has the power to withdraw the bill before the committee takes any testimony on it; point out the concerns listed above and ask her to withdraw 1161. Pound Solum, too, then the other committee members, starting with Chairman Gosch and Vice-Chairman Westra.
E-mail is the easiest way, and legislators do notice that inbox filling up. Make sure the e-mail subject is short, clear, and reminds the legislator of the topic—”Please Withdraw HB 1161, on consumer lines of credit“—because frankly I don’t remember all the bill numbers sometimes, especially not when I’m looking at dozens of new messages in my inbox and scanning subject lines before opening. Keep the e-mail itself short as well: maybe include CraigSk’s penultimate sentence—”This bill makes payday lenders richer and borrowers poorer”—and conclude, “It’s bad for South Dakota. Please send HB 1161 to the 41st day. Thank you.”
90, I have an e-mail request in to Rep. Langer. I await her response.
Let’s see here: Jeremiah Murphy, Harry Christianson, Paul Bachand, Doug Abraham, Justin Bell, Ed Hruska, Brett Koenecke and two outta state hired guns. Very impressive. The Magnificent Nine. My educated guess is (I’m sure there are more working behind the scenes) big shots like these scream “Campaign ATM” to the GOP caucus, and to errant Democrats if they want to be part of the sleaze.
Supporting loan sharks who press desperate families into impossible poverty is next door to supporting thugs who press young women into prostitution. Another kind of pain that is 100 percent avoidable.
Kris Langer is one more face on the sleazy side of Pierre.
Email the sponsors as well. Do they know what they are sponsoring?
http://legis.sd.gov/Legislative_Session/Bills/Bill.aspx?Session=2016&Bill=1161
Cory, thanks for your response. I followed your suggestions an sent out emails to 5 reps and my district senator. I hope others do the same. It only took me 15 mins to type out e mails to each member voicing my concerns with HB1161. I encourage others to take the short amount of time needed to do the same. How do our Elected reps know how to represent us if we do not give them our thoughts on issues? It is time South Dakota to be part of this democracy. Take the time to be heard.
Cory, the lobbyist for the pay-day loan industry straight up told everyone that Kris Langer’s HB1161 is designed to nullify any effect from IM 21 in the hearing on the bill this morning. The Catholic Nuns testified against the bill, but in God the committee does not trust, they voted 8-5 to send the bill do-pass to the House floor. Video lottery, pay-day loans, pawn shops–South Dakota is open for business! Feel free to steal my lines! :)