April 14th, 2017
HB 1913 (Rep. Kannady/Sen. Leewright), the Oklahoma Small Loan Act, would create a new predatory loan product in Oklahoma, known as a Small Loan. These loans would allow interest to be charged at an annual rate of over 200 percent, which is far costlier than what can be charged under current law. These loans would be available in addition to payday loans and other short-term loan products.
Protecting consumers from dangerous financial products is a long-standing role of state government. HB 1913 would overturn existing rate caps on loans of this size and put the financial health of economically vulnerable Oklahomans at greater risk. There is simply no need in Oklahoma for another high-cost predatory loan product designed to trap people in unaffordable debt.
Where Things Stand (as of 5/5/17)
UPDATE: Gov. Fallin vetoed HB 1913 on May 5th. Thank you to everyone who contacted the Governor on this issue! Click here for OK Policy’s statement.
HB 1913 passed the House of Representatives on a 59-31 vote on March 13th and passed the Senate on a 28-16 vote on April 27th. You can see how your Representative voted here and how your Senator voted here. Click here to see OK Policy’s statement expressing disappointment at the bill’s passage.
Download the talking points as a fact sheet
Oklahomans are already drowning in a sea of debt
- In 2014, Oklahomans took out nearly 950,000 payday loans and over 1.2 million “B” loans.
- That’s 77 consumer loan for every 100 adult Oklahomans.
- Our residents are already deeply in debt, and adding a new higher-cost product to the marketplace will only put more Oklahomans at financial risk.
HB 1913 substantially increases the cost of credit for many Oklahomans
- This bill would allow lenders to charge interest more than 4 times higher for an installment loan than what is allowed under current Oklahoma law.
- Under current law, lenders can charge up to $450 in fees for a loan of $1500. Under HB 1913, that same loan would come with interest charges of up to $2,108 – more than four times as much.
- See our Cost Comparison for for a direct comparison of loans under current law and loans propsed by HB 1913
HB 1913 will push people into public assistance
- This bill would not require lenders to verify the borrower’s ability to repay the loan, so it’s likely that loans will be made to individuals who cannot afford the monthly payments.
- When the borrower can’t repay the loan, the lender offers a second loan to pay down the first loan. Borrowers are then trapped in a cycle of new loans to pay old loans, and when they can’t keep up and they face financial collapse, they seek out public assistance to make ends meet while they recover.
- This increases the cost of the safety net programs that we all pay for.
HB 1913 only benefits the high-interest lenders who are pushing it
- HB 1913 effectively subsidizes the predatory loan industry by allowing them to use the courts to collect on loan debt. This bill supports the industry at the expense of Oklahomans.
- Many organizations strongly oppose this bill, including: AARP, Catholic Charities, Oklahoma Women’s Coalition, Oklahoma Conference of Churches, and Oklahoma Policy Institute.
Leaders of the faith community strongly oppose HB 1913
- A statement signed by 19 denominational leaders, that are part of the Oklahoma Conference of Churches affirms that HB 1913 is “predatory usury which harms, rather than helps, the poor and which is unacceptable in our society.”
- An Open Letter to Oklahoma Legislators from Oklahoma Clergy on Predatory Lending Practices, signed by over 100 clergy, states that “we find these predatory lending practices an affront to our moral center and in violation of the most basic tenets of our faith.” They “urge our legislators to reject HB 1913, as an act of faithfulness and in the best interest of all Oklahomans.”
Oklahomans throughout the state are being hurt by predatory lending practices. Dozens shared their stories with us.
“When my daughter was born I took out payday loans to keep us afloat and alive. I couldn’t pay the loan back so they suggested I go to another branch and take out another loan to pay off their loan. I was stuck in this cycle for 2 years. When I couldn’t afford to pay they kept trying to take it out of my bank account leading to hundreds of dollars in insufficient funds charges and banged up credit. All of that happened with the restrictions they have now. If they are allowed more flexibility more people will be stuck in this endless cycle!” – Ashley (Oklahoma City)
“I oppose this bill [HB 1913] because I’ve seen what it has done to a widow at my church. It has kept her strapped for money. She has not been able to get ahead because of these companies that charge her ridiculous fees for a small amount of money. I served nearly 21 years in the U.S. Regular and Reserve Army and I know that the military does not allow its service members to use these lenders. If the Army cares enough to protect its service members from such a practice why doesn’t our state government demonstrate the same level of concern for its citizens?” – Davison (Lawton)
Read more personal testimonies from Oklahomans who were victims of predatory lending practices.
Learn More / Do More
- Statement: HB 1913 creates unnecessary, abusive loans; Gov. Fallin should veto
- Fact Sheet on HB 1913
- Cost of Credit Comparison ("B" Loans v. HB 1913)
- "Small loan" bill means big debts for Oklahoma families (OK Policy blog post)
- Open letter to Oklahoma Legislators from Oklahoma Clergy on Predatory Lending Practices
- Oklahoma Conference of Churches Statement on HB 1913
- Lifeway Poll: Conservative and Faith Voters on Predatory Lending
- Rep. Kevin Calvey: Why should Oklahoma subsidize lenders who prey on the poor? (Tulsa World op-ed)
- Tulsa World editorial: Payday loan bill would help predatory lenders take advantage of poor Oklahomans
- Rev. Mitch Randall: Predatory lending needs to stop (Oklahoman op-ed)
- William Mark Bonney: Legislation makes poor Oklahomans targets for expensive borrowing (Tulsa World op-ed)
- Red Dirt Report: Payday loan bill passes House with 17 percent per month interest rate
- Father Tim Luschen: Legislature should reject high-interest loan bill (Oklahoman op-ed)