House Committee received testimony on legislation to cap payday lending interest rates at 36%, address economic disparities
LANSING, Mich. (April 23, 2024) – The Michigan House Insurance and Financial Services Committee recently heard testimony on Senate Bill 632 and House Bill 5290. Sponsored by Sen. Sarah Anthony (D-Lansing), SB 632, which was passed with bipartisan support in the Senate, would cap interest rates on payday loans in Michigan at 36%.
“This hearing is another crucial advancement in the ongoing effort to safeguard the economic security of Michigan’s communities — particularly for people who reside in low-income areas, communities of color, and rural parts of the state,” said Sen. Anthony. “People from all walks of life fall prey to these predatory lending practices every day — parents, teachers, students, seniors, business owners, and veterans. The personal testimonies from these folks prove that it’s long overdue we enact this commonsense reform.”
If passed, this legislation will align Michigan with 20 other states and the District of Columbia. The Community Economic Development Association of Michigan, the Michigan Catholic Conference, the Michigan League for Public Policy, AARP of Michigan, SEIU, Project: Green, the Center for Responsible Lending, and advocates and groups from around the state have shown support for this bill.
“I started my work as an organizer addressing the concerns of predatory lending practices. The reality is payday lenders are more likely to be present in communities like mine — that are a little bit more Black, a little bit more Brown, and a little bit more poor than the rest of the state,” said Rep. Abraham Aiyash (D-Hamtramck), sponsor of HB 5290. “We know this is by design.”
According to Samika Douglas, a West Michigan resident who gave testimony during the House Committee hearing, “It’s not just the paying back the monies, it’s paying back the fees. The fees that continue to occur, and what they do also is they do trick you. They tell you ‘You can come get this money, no problem.’ But they don’t tell you that these fees are going to occur at a high rate.”
The bills now await a vote by the House Insurance and Financial Services Committee before moving to the House floor.
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