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Banking Division Checking Brennan’s New Payday Loans; Late Fees on Top of 36% APR Now Legal

The South Dakota Division of Banking is investigating whether Chuck Brennan’s payday lending stores can offer one-week loans at 36% APP plus late fees. Here’s the Division of Banking’s statement:

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].

I had thought that the 36% rate cap we voters overwhelmingly passed last November made clear that payday lenders could not charge more than 36% interest, and that said charges included any sneaky fees they could tack on. But sure enough, it appears the Legislature undid that protection, too. Check out House Bill 1090, Section 4, now SDCL 54-4-44.3:

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!


  1. jerry 2017-07-11 12:52

    The camel’s nose is now in the tent Cory. South Dakota legislators got some hefty payoff for this.

  2. grudznick 2017-07-11 13:28

    Those swarthy fellows, Messrs. Rounds and Haggar, snuck one by you in his way out the door.

  3. mike from iowa 2017-07-11 14:43

    The voice of the people made it clear
    Wingnuts in the lege have no fear
    Of losing their place at the trough
    By telling the voice to buzz off

    What was the excuse this time? The people still don’t know what they want?

  4. Bob Mercer 2017-07-11 16:17

    The legislative history shows that Rep. Larry Zikmund, R-Sioux Falls, proposed the amendment in the House committee (seconded by Rep. Wayne Steinhauer, R-Hartford). The committee, chaired by Rep. Tim Rounds, R-Pierre, approved the amendment on a voice vote. Rounds sponsored the bill. The House proceeded to pass the amended bill 67-0. The Senate didn’t change the bill and passed it 34-0.

  5. grudznick 2017-07-11 17:19

    If what Mr. Mercer says is true, as it surely is, then Mr. Nesiba who pushed for the smiting measure #21 and testified for this bill and said he thought it was 95% a really good thing voted for it. Mr. Nesiba thinks that the HB 1090 is a good thing, and you know he would not think that if Mr. Hickey was over there in Scotland phone home to tell him no.

  6. Cory Allen Heidelberger Post author | 2017-07-11 17:22

    See? As Mercer points out, this wasn’t a Republican trick. Everyone in the building voted for it. Repealing 54-4-44.3 needs to become DFP Bill #1 for 2018 Session.

  7. OldSarg 2017-07-11 19:50

    This should be a good indicator of why it is a mistake to think you can pass enough laws to protect yourself from yourselves. On to Health Care for the minions!

  8. Cory Allen Heidelberger Post author | 2017-07-11 20:05

    OldSarg, we could pass effective laws if the Legislature wouldn’t meddle with the will of the people. We need to rein in the exploitative payday lending industry as surely as we need to rein in sex traffickers.

  9. mike from iowa 2017-07-12 06:35

    OldSarg must have been a tunnel rat in Vietnam and still retains tunnel vision.

  10. Don Coyote 2017-07-12 09:39

    cah: “OldSarg, we could pass effective laws if the Legislature wouldn’t meddle with the will of the people.”

    In a republic, the will of the people can also be expressed through their elected representatives. I would say a 100% affirmative vote by Republicans and Democrats in a legislature is representative of such expression.

  11. Cory Allen Heidelberger Post author | 2017-07-12 19:46

    This whole “republic” concept is (a) overrated and (b) an excuse for arrogant Republican legislators to do what they want. I dispute the notion that the unanimous votes of the House and Senate reflect the will of the people on this specific issue. IM21 passed by a greater margin than every contested Senator except for Stace Nelson. Some major disconnect occurred in the Legislature. Let’s call a special session to fix this problem! (It’s at least as pressing an issue as non-meandered waters, isn’t it?)

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