5 states, including Louisiana, take aggressive steps to rein in payday loan debtors
5 states are taking aggressive steps this week to curb the payday loan industry, but there are many more to come, the companies that provide those loans say.
Nationwide, payday lenders issued $6 billion in payday loans in January, according to the Federal Reserve Bank of Atlanta.
That is more than double the amount they issued in the first half of 2017.
The surge in loans has spurred concern among regulators, including New York State Attorney General Eric Schneiderman, who has said payday lenders should be banned from state-run credit unions and loan programs.
Some states, like Louisiana, are making it tougher for people to take out payday loans.
They are imposing a $400 per month cap on how much they can borrow, while the state of Missouri has passed a law that would prevent people from making payments after they’ve been out of work for six months.
Some credit unions have already started removing their loan applications from their websites, though that does not necessarily stop the payday lenders from taking their business.
The companies say it is not their place to do so.
“The vast majority of payday lenders are in compliance with state and federal laws,” said Kevin Kelly, president of the Louisiana Association of Credit Unions.
“We do not and will not discriminate against individuals, families or businesses.”
The federal government also has weighed in on the payday industry, issuing guidelines last week that would limit the amount of money borrowers can borrow after a payday loan expires.
Those guidelines were intended to keep payday lenders out of credit unions.
The guidelines also could help regulators protect people from predatory lending practices.
A federal judge on Monday blocked a law from taking effect that would have prohibited payday lenders and other debt collectors from collecting on credit cards.
The decision, by a federal judge in Texas, could affect other states that have similar laws.
The Supreme Court on Monday declined to hear a challenge to a Texas law that requires payday lenders to verify borrowers’ eligibility.
The law was challenged by the American Civil Liberties Union.
“States can have a tough time enforcing their laws,” the court said in its opinion.
“But when they do, we believe that a state should not be required to make the choice of whether to provide services to an illegal economy.”
Read more:The court’s order is part of a trend in which the justices are increasingly favoring states’ interests over federal ones.
For example, in the 2016 case, Florida sued the federal government over the Trump administration’s plan to phase out the Affordable Care Act.
The Supreme Court declined to review the case, but in February, the justices said they would hear the case.
That decision, which could have broad implications for the health care law, was a blow to the administration’s push to repeal the law, which Republicans have long argued is a disaster for the nation’s health care system.
In a case that could affect hundreds of millions of Americans, the Supreme Court also said it will consider a lawsuit from the Justice Department against states that did not extend unemployment benefits for state residents in the weeks after the Sept. 11 attacks.
The court is expected to decide whether to hear another challenge to the Trump health care legislation this summer.