Kentucky Committee Passes New Payday Loan Policies

Kentucky adds database, 10-year freeze

A Senate committee in Kentucky passed a bill Friday that requires the state to keep a database documenting all outstanding payday loans. The database will help enforce a policy already in place that says individuals are not allowed to have more than two outstanding payday loans at a time.

The Kentucky legislature also put a 10-year freeze on new payday loan businesses opening. The bill now goes to the Senate floor for consideration.

More limits

Besides only being able to have two outstanding payday loans, people also are not allowed to borrow more than $500 per payday loan. The bill is aimed at making sure people don’t end up with expensive fees or in a cycle of debt.

Some senators did not approve of the moratorium on new payday lending businesses.

“It seems like we’re locking out future payday lenders to the benefit of current payday lenders,” said Sen. Ernie Harris, R-Crestwood, who voted against the measure.

Under control

Sen. Damon Thayer, the Georgetown Republican who is chairman of the Senate State & Local Government Committee, added the amendment to the bill that placed the 10-year moratorium on payday lenders. He said the industry had requested it.

Legislators who support of the moratorium say they approve of putting a stop to the proliferation of payday lending businesses.

“I would think that the opponents of the … deferred deposit industry would like the moratorium because it restricts that growth,” Thayer said.

Conflict

Some Senators don’t like the moratorium on new businesses. But they say they will vote for the bill anyway because they think the database is important.

Rep. Darryl Owens, D-Louisville, said he didn’t like the protectionist nature of the amendment but might vote for the bill if it returns to the House just to get the database provision into law.

The bill now goes to the Senate floor for consideration. A similar bill was proposed last year but didn’t pass.