Louisiana Governor Vetoes Installment Lending Bill
After passing Louisiana’s House of Representatives on May 10 and State Senate on May 16, Louisiana Governor John Bel Edwards has vetoed SB381, the Louisiana Credit Access Loan Act. The legislation would have allowed consumer lenders to offer short-term installment loans up to $1,500 and with a term of between 90 days and one year.
While it would have limited loan finance charges to 36 percent on unpaid balances, it also allowed a monthly maintenance fee of up to 13 percent as well as nonsufficient funds charges and underwriting fees of up to $50 for larger loans. These fees could have pushed the interest rates into triple digits.
Along with his veto, Edwards sent a letter to Louisiana Senate President Page Cortez explaining his decision.
The bill “purports to create additional loan opportunities for individuals who have difficulty obtaining loans through traditional banks,” the letter reads. “However, and despite the best efforts of the bill’s author, I do not believe that the bill adequately protects the public from predatory lending practices.”
“While I would be willing to support, and sign into law, a bill that reforms payday loans in a manner that provides appropriate safeguards on interest rates and fees, this bill unfortunately does not meet that standard,” Edwards wrote.
The legislation’s sponsor, Republican State Senator Rick Ward, said that the loan product his bill would create would help Louisiana residents living paycheck to paycheck who have difficulty accessing traditional forms of credit.