FRANKFORT — A “real-time” database of payday lending transactions will be up and running as of May 1, according to Charles Vice, Commissioner of the Department of Financial Institutions.
And, according to the CEO of the company, which will operate that database, Kentucky is likely to see a reduction in the number of payday lenders after that. Thomas Reinheimer of Veritec Solutions said his company operates such databases in nine other states and in each, about “18 to 20 percent” of licensed payday lenders closed down once the database was in operation.
The database is required under a law passed last year which was sponsored by Rep. Johnny Bell, D-Glasgow. It makes illegal internet payday loans and requires all payday loan transactions to be entered into the database, including customer name, address, phone number, amount of the loan and the number of loans which the customer has outstanding.
Kentucky law limits such loans to two and a maximum of $500 at any one time for any one customer. But consumer groups which seek a cap on the interest such lenders can charge contend the average customer often has as many as nine loans in the course of a year. Bell sought an interest cap two sessions ago, but critics questioned data cited by those supporting the cap. So last session, Bell agreed to sponsor House Bill 444 – requiring the database.
Vice, the DFI commissioner, said the new database will provide that information. If a customer attempts to secure a third loan – in violation of the current law – the database will tell the lender the customer is ineligible for another loan until the previous ones are paid off. It will also track the number of lenders, customers, loan amounts and volume as well as fees and interest.
Reinheimer of Veritec said similar databases in the other nine states “have effectively enforced the policy requirements” or laws in those other states.
Vice said the database will also allow his agency to perform “for cause” audits of lending firms when problems show up in the database. Currently, every payday lender in the state is audited annually by DFI.
Payday lender critics contend such businesses prey on poor people, often rolling up fees and interest on repeat loans which end up totaling as much as 400 percent annually. Representatives of the industry contend they are allowed to charge only $15 per $100 loaned, and Vice confirmed that Wednesday before the House Banking and Insurance Committee.
That doesn’t account for repeat borrowers – but Vice said that can’t be effectively tracked without the database.
Rep. Darryl Owens, D-Louisville, has filed a bill in the current session to cap interest rates at 36 percent, a level used in some other states and by the federal government for military personnel. The committee chair, Rep. Jeff Greer, D-Brandenburg, hasn’t said if he’ll hear testimony on the bill – but he said he wants to see the results of the database before considering any further changes to the law.
Rep. Tim Firkins, D-Louisville, praised the database bill but he said he believes the data collected “is going to make the case for capping rates even stronger.”
RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.
State News
Database of payday lending starts up May 1
Data could show if interest caps are needed
- State News
-
-
Ky Supreme Court Chief Justice John Minton elected to 2nd term
FRANKFORT Kentucky Supreme Court Chief Justice John Minton has been re-elected unanimously by his fellow justices to serve another term as the court’s Chief Justice.
-
Secretary of state forecasting 10-12 percent primary turnout
FRANKFORT Kentucky’s chief election officer isn’t happy about it, but she’s predicting only a 10 to 12 percent turnout in Tuesday’s election.
Alison Lundergan Grimes said Thursday she can detect only “minimal to moderate -
Farmer may face scrutiny from ethics panel
FRANKFORT Richie Farmer’s administration of the state Department of Agriculture will undergo at least an initial review by the body charged with oversight of executive branch ethics and by another charged with reviewing personnel matters.
-
Kentucky ICAC Task Force Works To Protect Children Online
FRANKFORT, Ky. – As technology grows, so does the opportunity for child pornographers to exploit it. Social networking sites, chat rooms, file-sharing programs, message boards and forums now make it easier for offenders to
-
Lawmakers return to Frankfort
FRANKFORT, Ky. (AP) — Lawmakers kicked off a special legislative session Monday to pass a transportation budget and a prescription drug abuse bill.
-
Tales of survival from Woodward's deadly tornado
Stirring stories of survival are emerging from Woodward's tornado, but none was more compelling than that of an 87-year-old widow who escaped unscathed by hiding in her bedroom closet while her house exploded around her. Sixty-five years earlier she survived Oklahoma's deadliest tornado, one that killed 116 of her neighbors, by hiding under a dining room table.
-
Gambling amendment introduced
Gov. Steve Beshear and Republican Sen. Damon Thayer on Tuesday announced the much anticipated gambling amendment they hope to push through the legislature, an amendment that would allow up to seven casinos, five at existing
-
Judge nixes redistricting plans
Franklin Circuit Judge Phillip Shepherd on Tuesday at least temporarily threw out the General Assembly’s plans to redraw state legislative districts and ordered 2012 elections to be conducted under the previous district boundaries unless
-
Minton asks for additional funding
With several circuit clerks seated behind him, Kentucky’s Chief Justice of the Supreme Court told a legislative budget subcommittee Tuesday the court system can’t retain entry-level employees because as soon as they are trained they’re
-
Shepherd brings legislature to stop
FRANKFORT — Franklin Circuit Judge Phillip Shepherd not only put on hold the filing deadline for candidates for state House and Senate districts — he effectively shut down the business of the General Assembly.
- More State News Headlines
-
Ky Supreme Court Chief Justice John Minton elected to 2nd term
Raw Video: Activists Allege Massacre in Syria
NJ Man Charged With Murder in Death of Patz
Support, Fun for Kids of Fallen Soldiers at Camp
Fugitive Penguin Caught, Returned to Aquarium
50 Years Later, Underground Fire Still Burning
Light Show Transforms Sydney Opera House
Raw Video: Unruly Passenger Restrained in Miami
Raw Video: Robber Uses Drive-thru Window
Raw Video: Dragon Arrives at Space Station
Calif.'s Coronado Named Nation's Best Beach
CEO Salaries Become Sore Issue in Labor Disputes
Raw Video: Fight Erupts in Ukrainian Parliament
Texan Ranchers Remain Wary of Drought
Raw Video: Soldiers Plant Flags at Arlington
Police: Man Arrested in Etan Patz Disappearance
NYC Protests: the Revolution Will Be Scripted
Chicago U.S. Attorney Fitzgerald Resigns
Neighbors of Etan Patz's Suspect: It's Shocking
Gulf Fishermen Reel From Seafood Troubles
Stuntman Makes Skydive Without Parachute in UK
