Stephen Stetson: Keep the faith, Alabama’s lending reform movement will win

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It’s no secret that tremendous wealth can open doors, and you don’t have to look far to see the colossal power of money in the political process. Here in Alabama, the high-cost lending industries are throwing hefty sums of money around, merging affluence with influence and hoping to keep lawmakers and regulators from getting swept up in the rising sea of public outrage about how many Alabamians are caught in debt traps.

A July 12 report by AL.com’s Kyle Whitmire exposed a luxurious trip for Alabama legislators to a North Carolina spa, paid for by the Alabama Lenders Association. The state Ethics Commission cleared the event, but it’s still worth noting that the lawmakers who attended the installment lenders’ conference in lush surroundings are among those who would consider legislation affecting consumer loans in our state.

Alabama Arise has teamed with faith-based groups and consumer advocates across the state in a multi-year, grassroots push for reasonable protections for Alabama borrowers across a wide spectrum of loan types. Our movement’s main focus in recent years has been on reining in annual interest rates of 456 percent on payday loans in Alabama – not to mention rates of 300 percent a year on auto title loans. (Yes, you read those numbers right.)

The need for change is real, and Alabama’s lending reform movement has real momentum. A payday loan reform bill sponsored by Sen. Arthur Orr, R-Decatur, nearly passed the Legislature this spring, receiving overwhelming Senate approval before dying in the House on the session’s last day. Many passionate advocates across Alabama believe 2017 could be the year for true and substantive lending reform.

Payday and title lending practices don’t involve ensuring the borrower’s ability to repay the loans, and they have sent thousands of borrowers spiraling into cycles of deep debt while draining money from other areas of the state’s economy. Georgia, Arkansas, North Carolina and many other states have placed reasonable restrictions on these and other types of consumer loans, and they offer plenty of examples of profitable businesses lending money to struggling borrowers without resorting to exorbitant interest rates. There’s no reason that couldn’t happen in Alabama as well.

Unfortunately, reports about a lender-funded junket to a North Carolina spa can leave everyday citizens feeling dispirited. How can an email or phone call from a constituent compete with a luxurious vacation hosted by lenders? It’s like we’re playing checkers, and they’re playing Monopoly.

That kind of pessimism is debilitating to civic engagement and democracy. When ordinary folks feel like politics is a one-sided game, it’s no wonder that many would stop caring entirely. It’s a lot easier just to shrug and play Pokemon Go or talk about college football.

But Alabamians shouldn’t give in to the temptation to give up. Lending reform is still on the move, and there’s real hope for change at both the national and state levels.

Nationally, proposed new federal rules would require important consumer protections for payday and title borrowers. Alabamians can urge the Consumer Financial Protection Bureau to strengthen those proposals further by submitting a comment at stoppaydaypredators.org/ARLA. Every comment helps.

At the state level, a new task force considering consumer lending issues in Alabama is heavy with industry representatives, but Arise and other consumer advocates on the task force will push hard for consumer-friendly changes. We’ll also oppose efforts to transform short-term payday loans into new longer-term loans that would keep borrowers in debt year-round. Such loans may not be called “payday loans,” but they could be equally usurious.

The lending reform movement has broad support across Alabama and across the political spectrum, and the outcry for change is getting louder every year. The coalition against high-cost lending practices in Alabama won’t give legislators the spa treatment. We’re determined to get results through the power of the people.

Our message to everyday Alabamians who support change is this: Let’s keep the faith, redouble our advocacy and remind our elected officials of the constituents they really represent. There are some things money can’t buy.

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Stephen Stetson is a policy analyst for Arise Citizens’ Policy Project, a nonprofit, nonpartisan coalition of 150 congregations and organizations promoting public policies to improve the lives of low-income Alabamians.

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