Notes from the Field:
Advocacy in Action in Baton Rouge, Louisiana
Inclusiv, its members and partners mobilize to combat predatory lending
On April 29th, Inclusiv/Network Program Officer Jules Epstein-Hebert represented Inclusiv in Baton Rouge before the Louisiana House Commerce Committee to deliver testimony in support of Representative Jordan’s bill (HB 528) setting an interest rate cap on payday (and similar) loans. Rep. Edmond Jordan also sits on the board of our member Essential FCU and his district encompasses East and West Baton Rouge. Essential’s CEO and Inclusiv board member, Rick Williams, asked us to attend the committee meeting in a show of support for the bill.
Although Inclusiv's testimony appeared to have been well received, and was joined by strong testimony from Judy DeLucca, CEO of member New Orleans Firemen’s, Rick Williams, Stacey Roussel, Senior Policy Analyst with the Louisiana Budget Project, and by representatives from Jesuit Social Services and Together Louisiana, the bill was defeated by a vote of 11-2 by the Committee and not “reported favorably” to the full legislature for this session. The two favorable votes were from Rep. Jordan and Rep. Cox, who represents the rural District 23.
Judy DeLucca was joined by NOFFCU's Director of Real Estate Lending and Inclusiv board member James Hunter along with Lester Dale of the Faith Fund. Inclusiv board member Shasta Leininger of ASI was also present and noted her support for the bill. Bob Gallman and Angela Gervais of the Louisiana CU League also mobilized their members and attended the proceedings.
There was a packed agenda for the meeting and the lawmakers had already heard testimony on several other bills before the committee, ranging from procedural issues and amendments for existing bills to an attempt to revise a recent executive order concerning a tax exemption program for manufacturers.
Rep. Jordan introduced the bill to his colleagues as not an attack on loan funds but an effort to put reasonable limits on predatory lenders. After his introduction, Stacey Roussel provided testimony into the effects of payday lending fees on the consumers and economy of Louisiana, as well as nationally. Jules Epstein-Hebert followed with testimony focusing on how our members in Louisiana are providing safe alternatives to payday loans.
Rick Williams provided testimony next on Essential’s PAL program, and answered questions about the availability of his products. A sticking point for lawmakers seemed to be the thirty-day wait before new members may take on these loans. Judy DeLucca then provided testimony on the development services NOFFCU offers to PAL clients and discussed how the high profit margins of payday lenders afford them the opportunity to advertise to a wider customer base than non-profit CUs.
Testimony in favor of HB 528 was rounded out by comments from faith-based organizations. The representative from Jesuit Social Services reminded the lawmakers that predatory lending is classically known as “usury,” exploits the “most-harmed” in society, and is condemned in the Bible. Together Louisiana's representative emphasized that payday loans create a debt trap for low- and moderate-income consumers and that these members of society, like all others, deserve respect and dignity.
The two representatives from the loan fund industry who presented testimony countered by arguing that their clients have no alternatives to their products. Even Rep. Cox, who voted in favor of the bill, told us afterward that the constituents of his rural district do not have access to financial institutions other than loan funds or pawn shops, or friends and neighbors. One of the loan fund representatives also claimed she employees over 100 staff throughout 37 locations and a 36% rate cap would put them out of business “tomorrow."
Based on the lawmakers’ statements, it seemed the deciding factors in rejecting this bill was the notion that consumers have little alternative to payday lenders and a feeling that the high rates and fees are justified given the special circumstances and risky environment that loan funds operate under.
While the bill will not advance to the floor this session, I believe it was still worthwhile for Inclusiv to have participated in the debate. Rep. Jordan and our members clearly appreciated our leadership and presence, and there seems to be excitement around trying again during the next session. I know Rep. Jordan was disappointed by the lack of engagement from CUs when he introduced a similar bill last year, but that was certainly not the case this week. We showed up in 2019 and we will continue to build momentum into 2020.
Are there important upcoming pieces of legislation or actions in your area that would benefit from Inclusiv's participation? We'd like to hear about them! Please contact Jules Epstein-Hebert at email@example.com.