Banking Law

Three weeks ago, we discussed a proposed Colorado law that would effectively shut down payday lending in that state. At that time, the bill had made it out of a House committee on a purely partisan vote. Since then, a version of the bill has been passed by both the state House and the state Senate (by the narrowest of margins) and is in the process of reconciliation. It's likely to make it out of conference, since the main difference in the Senate and House bill appears to be pushing the effective date back to December 31 of this year so employees of payday lenders can (if they're able) find another job.

Wishing you a very Trump-like brand of holiday cheer: "Merry Christmas! You're fired!"

Backers of the bill say it is necessary to break Coloradans who use payday lending services out of the cycle of debt that keeps them constantly owing large sums of money to the lenders.

But opponents say that the bill will drive many payday lending businesses to close because the amount of profit they can make on a two-week loan now becomes minuscule. That could add as many as 1,600 people to the state?s unemployment rolls, they warned.

The old cliche that the road to hell is paved with good intentions has been given new life in Colorado. Not only will existing payday borrowers have no other legal source of credit, but a whole new bunch of potential payday borrowers (who used to work for payday lenders) will join them on the highway to the land of the loan sharks.

At least none of them will "constantly owe large sums of money" to a regulated lender. Thank god for that.