By Mary Beth Schneider TheStatehouseFile.com INDIANAPOLIS—It was one of the more unusual days in the Indiana Senate, as lawmakers took up two bills that stood in stark contrast to each other. One, Senate Bill 104, sought to rein in the predatory practices of payday-loan merchants who charge exorbitant fees and rates from the people who […]
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INDIANAPOLIS — It was one of the more unusual days in the Indiana Senate, as lawmakers took up two bills that stood in stark contrast to each other.
One, Senate Bill 104, sought to rein in the predatory practices of payday-loan merchants who charge exorbitant fees and rates from the people who can least afford them.
The other, Senate Bill 613, created more short-term loan options at rates so high they’d be a felony under current loan-sharking laws.
Guess which one passed.
Sen. Greg Walker, the Columbus Republican who authored SB 104, is disappointed, but he’s not giving up. He doesn’t pick his bills, frankly, because he thinks they’ll be easy sailing. Among other things, he’s pushing for redistricting standards that at least make gerrymandering more difficult.
“I’m the champion of issues that make a person squirm,” he said with a rueful laugh.
He’s one of the quieter lawmakers, seldom making speeches on the Senate floor, never indulging in histrionics.
He focused mostly on numbers and statistics last week as he urged senators to put the brakes on payday lenders by capping their interest and fees at 36 percent of the principal, instead of rates of 100 percent or higher.
But unlike the senators sitting in front of him, Walker told me later, he has personal knowledge of these businesses that profit off of human desperation.
He once took a job at one of these businesses, one no longer operating in Indiana.
He lasted three months.
“It was all I could take,” Walker said. “I was very unhappy with the role that I played with the consumer lender. I saw the stress. I saw the anxiety. I saw the financial spiral of the clients of the business.”
One of the shortcomings of the legislature, he said, is that “so few of us in the legislature have got any first-hand experience with this market and the nature of people’s distress when they seek loans in this environment.”
Lobbyists for these businesses recite a passage from the book “Hillbilly Elegy,” as author J.D. Vance describes getting a payday loan to avoid an overdraft fee. “See? It’s needed! Take it from an Ohio Appalachian guy who knows!” they say.
But Walker knows. And so do the multitude of church, anti-poverty, community and veterans organizations that came to the Statehouse to tell them there are options for those in need that don’t put them into a spiral of debt.
If these loans were just the rare last-ditch option used at most two or three times a year, he wouldn’t be fighting them.
But he cited studies both nationally and in other states that found “people tend to very heavily rely on payday loans for borrowing the same amount of money over and over and over again.”
The average customer taps these eight times a year, Walker said. In Florida, people were borrowing from them 12 times a year, and some as many as 25 times a year, taking out new loan after new loan to cover the one they couldn’t pay. And the fees and interest just pile up.
“That kind of cycle tells me that this is a dead end,” he said.
He calls it by a name with Biblical resonance: Usury.
“Usury is not an interest rate. Usury is not an APR (annual percentage rate.) Usury is when the lender knows that the user will either default or rewrite the loan balance before its termination,” Walker said.
Walker’s bill narrowly failed, 27-22. The other bill, authored by Sen. Andy Zay, R-Huntington, narrowly passed 26-23. (Sen. Mike Crider, R-Greenfield, voted against both bills.) Walker thinks lawmakers are “nervous” about the issue. What legislator wants to be known as the loan shark’s best friend, after all? And Gov. Eric Holcomb showed that nervousness, saying the bill gives him “heartburn.”
“I hope that tension and that conflict, that internal conflict, is only heightened, and I will do what I can to make my House friends uncomfortable,” Walker said.
He’s going against some of the highest-priced lobbyists in state, including some former legislators, who now count these short-term loan companies among their clients. And many legislators can count campaign cash from the industry.
Walker has received some of that money, too. In 2017, the South Carolina-based Advance America sent him $300 and gave $500 to the co-author of this year’s bill, Sen. John Ruckelshaus, R-Indianapolis.
They later asked for, and got, their money back.
Mary Beth Schneider is editor of TheStatehouseFile.com, a news website powered by Franklin College journalism students. She covered politics for 20 years for The Indianapolis Star. Send comments to dr-editorial@greenfield
reporter.com.
