A lawmaker from Sioux Falls is working to regulate the payday loan industry. Members of South Dakota’s legislature have tried to impose limits in past sessions, but one lawmaker believes the 2014 term is a time for progress.
State Representative Steve Hickey says the bill he’s proposing to regulate pay day loans is extensive. A main element of it is a registry. He says state law limits the number of payday loans a person can take out to four…but, right now, no one keeps track.
Hickey says people staunchly in favor of or opposed to payday loans don’t like the proposal, but he considers it middle ground.
"The industry started to call me and say, ‘Let’s negotiate. We agree. This is the wild west.’ Those are their terms. There’s reasonable regulation, and I said, ‘Some of these are the things we tried to bring in previous years.’ They said, ‘We want them this time.’ So not everybody’s on board," Hickey says. "I’ll tell you that the coalition we had going called South Dakotans for Reasonable Lending does not like the bill and so do some of the rogue players in the payday industry, not like the bill, but there are a number in the middle, including myself, who are open to those reforms."
Hickey says the bill does not include a cap on the interest rates lenders can charge. He says it does include a fee of fivie cents per loan that payday lends have to put into a consumer credit counseling fund. Hickey says that could help people cope with the personal damage of taking out high-interest loans.
Another charge to lenders establishes a financial literacy education fund to give grants to school districts for lessons in basic money management.