Kentucky Urged to Violate Constitution by CRL

Kentucky ready to slam door on small business

Does Bill Strong hate the Constitution?

Jack Brammer of Kentucky’s Herald-Leader newspaper reports that Kentucky wants to give current payday loan companies in the state the chance to maintain solid footing. Unfortunately, proposed House Bill 444 now has a protectionist measure that some state lawmakers see as a way to “eliminate new competition.” However, the reality is that they’re asking for a 10-year moratorium on new payday lenders in the state.

The legislation has cleared the Kentucky Senate 32-6, but Gov. Steve Beshear and at least one lawmaker is concerned about whether such a limiting moratorium is unconstitutional.

Then don’t allow it to continue!

Beshear called the original (pre-moratorium) form of the bill “a step in the right direction.” According to Brammer, it would “eliminate 25 to 30 percent of such loans with the enforcement of existing restrictions. State law says consumers may have only two such loans totaling $500 at a time, but there has never been a way to track that information.”

Democratic Sen. Kathy Stein is against House Bill 444 because it would “violate the state and federal Constitutions. It essentially is a restraint on trade. It prevents any other folks who otherwise are qualified to engage in that business. It gives exclusive rights to the folks existing now and I think that violates the Constitution.”

Again, here’s their real purpose

Before the Senate voted, the Kentucky Coalition for Responsible Lending lobbied lawmakers to cap payday loans. This has been proven mathematically to be untenable, yet the group insists upon it. In spite of the fact that it will put stores out of business and people in the unemployment line.

Why don’t they care? Because it’s straight out of the Center For Responsible Lending’s playbook. Let’s put up a huge smokescreen of possibly unconstitutional law changes, but sneak in a cap rates to levels that will put lenders out of business. It’s great for Self-Help Credit Union and similar groups under Martin Eakes‘ control, who will swoop in like vultures with their own products and services. They will put honest people out of work so that they can turn a profit. If they were so interested in healthy, honest competition, they’d make more of a showing in the short-term loan market.

It’s Bill Strong’s fault

Tres Watson of the Community Financial Services Association of America (CFSA) said that the idea of the 10-year moratorium came from Republican Senator Bill Strong, who works in insurance. Oddly enough, Strong’s wife Judy, who runs small payday lending businesses in the area, supports the moratorium. She would certainly be in the minority. Reasonable limits and a statewide lending database are reasonable, but the moratorium is a rider straight out of the mouth of Martin Eakes, as is the untenable cap.

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