By Laura Tillman/The Associated Press
JACKSON, Miss. (AP) — A bill that would have allowed small lenders to charge more on certain types of loans died with a Tuesday deadline for committee action.
House Bill 1396 would have increased the allowable interest rates on loans under $1,500 from 36 percent to 99 percent. Supporters say the measure would have given borrowers a lower-cost option to payday lenders.
The bill had passed the House and was referred to the Senate Business and Financial Institutions Committee, but Chairman Gary Jackson, R-French Camp did not bring the bill to a vote.
“I did not feel it was in the best interest of our committee or the people we serve,” Jackson said.
Tuesday was the last day for Senate committees to act on legislation passed by the House.
Proponents said that the bill would have provided a better option for consumers than going to payday lenders, who can charge more than 500 percent interest. Consumer lenders generally do not lend less than $1,000, so borrowers often go to payday lenders for small amounts. Proponents hoped the bill would entice consumer lenders to get into market of lending $1,000 or less by allowing them to charge higher interest.
Opponents of the bill said the new rates would have been a danger to consumers, and a strain on Mississippi’s fragile economic state.
Ed Sivak, director of the Mississippi Economic Policy Center, commended Jackson for killing the bill.
“The death of House Bill 1396 is a major victory for Mississippi’s working families,” Sivak wrote in an email.
The bill would have also significantly raised the maximum interest rates on loans up to $4,000, though lenders would not have been required to change their rates. Maximum rates on loans of $1,600 would have been set at 74.83 percent and 56.73 percent for loans of $4,000.
Bill author Rep. Hank Zuber, R-Ocean Springs, said he was disappointed at the bill’s death.
“I respect Chairman Jackson’s decision and I look forward to working with him and possibly even studying the subject over the summer so we can come up with a better alternate rate, specifically between $500 and $1,000,” Zuber said.
Zuber said he would further investigate criticisms made by the bill’s opponents.
“I will look at some of the statements that were made and will make sure that those statements are backed by the facts,” Zuber said.