A bill allowing lenders to make even more money on predatory loans passed a state senate committee this week, with supporters of the legislation telling reporters that increased profits are necessary to keep personal-loan lenders in Colorado.
That's the major argument for the bill. Specifically, backers told the Durango Herald that the one company offering such loans will leave Colorado if it's not allowed to make millions more here.
The Denver Post's Joey Bunch was the only journalist to report how OneMain Holdings, Colorado's only predatory loan company after merger last year with Springleaf Holdings), is doing financially. I mean, that's the key question.
Is it struggling to make ends meet, like many of the folks it lends money to are? People who pay the company 36 percent interest on a $1,000 loan as it is?
Phil Hitz, who represented Springleaf Holdings, acknowledged that the company is very profitable nationally and confirmed the 30 percent Colorado growth over the past four years.
Bunch apparently didn't ask Hitz if Springleaf would leave Colorado if the bill didn't pass, but all indications are that it would not.
Last year, when a similar predatory-lending bill was debated, the Colorado Attorney General's office testified that access to such loans is not threatened under the current interest-rate structure. Similar testimony was reportedly offered yesterday as well.
Opponents of the bill, led by the liberal Bell Policy Center, are saying the proposed legislation will simply hand $9.5 million more in loan charges to an already-profitable company that preys on struggling families. The cost to finance a $5,000 loan, for example, would increase 26.9 percent, according to Bell.
The bill's backers haven't refuted the key point that lenders of personal loans are profitable in Colorado. They say One Main is unhappy with how much profit it's making--without disclosing how much is enough. There's no indication that the lenders will walk away from Colorado and its money.
To be fair, Hitz told Bunch that Colorado is the company's lowest-yielding state, and other states help subsidize it.
But lowest-yielding state compared to what? Astronomically-earning ones? We know the company is "very profitable" nationally. So the fact that it's doing well enough in Colorado is a signal that states should protect consumers, many of them low-income, and adopt Colorado's humane regulatory framework.
That's another conversation reporters might have with Hitz.