SFGate.com has an update on AB377, a proposal to increase the maximum California payday loan limit from $300 to $500.
We like this. $300 does not go far today. Plus, the payday loan customer typically leaves with $255 rather than $300 because the fees are taken out first.
Of course, SFGate.com gets the conclusion wrong! They’re against the Bill. No surprise! They’re lucky enough to have never needed a small micro-loan to survive.
What SFGate.com said: “Existing regulations limit payday lenders to loaning customers $300 at a time. AB377 would raise that to $500. The more money the lenders can hand out, the more of that 459 percent (interest) they can collect. This clearly isn’t about the customers – there hasn’t been any groundswell of demand from payday loan customers. Why on earth would (author Assemblyman Tony) Mendoza want to saddle this state’s most cash-strapped citizens with more debt? Even more insidious is a provision in the bill that would extend regulations to Internet payday-loan providers. Internet payday lending operates in a legal gray area in California – many are unlicensed and flout the rules. This paves the way for their legitimization.” – Editorial, June 17, 2009
What SFGATE said happened: This special-interest bill, which had already cleared the Assembly on a 53-8 vote (with 19 members not voting), passed its first big test in the Senate. It advanced through the Senate Banking, Finance and Insurance Committee with seven members voting yes, one voting no and four not voting. Sen. Lois Wolk, D-Davis, the only Northern Californian on the committee, voted against the bill.
What’s next: AB377 was referred to the Senate Judiciary Committee, which is chaired by Sen. Ellen Corbett, D-San Leandro, and includes one other Bay Area member, Sen. Mark Leno, D-San Francisco.