BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
SB 984 (Hueso)
Version: February 10, 2016
Hearing Date: April 19, 2016
Fiscal: Yes
Urgency: No
TH
SUBJECT
Pilot Program for Increased Access to Responsible Small Dollar
Loans: Extension
DESCRIPTION
Existing law establishes, until January 1, 2018, the Pilot
Program for Increased Access to Responsible Small Dollar Loans
for the purpose of allowing greater access to affordable
installment loans in principal amounts of at least $300 and less
than $2,500. This Pilot Program, administered by the
Commissioner of Business Oversight, requires participating
licensees to pay a fee to participate in the program, and
imposes specified limits on the interest rates, charges, and
fees that a licensee may impose, as well as other program
requirements.
This bill repeals the January 1, 2018, terminal date for the
Pilot Program, and extends the Pilot Program indefinitely as the
Program for Increased Access to Responsible Small Dollar Loans.
BACKGROUND
The Department of Business Oversight administers the California
Finance Lenders Law (CFLL) and licenses finance lenders who make
secured and unsecured consumer and commercial loans for less
than $2,500 under that law. In 2008, the former Department of
Corporations (DOC) produced a report indicating that CFLL
licensees made 96,665 consumer loans under $2,500. Of this
amount, 81,790 were unsecured loans. In contrast, during that
same time period, payday lenders made over 11 million payday
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loans under the California Deferred Deposit Transaction Law.
(DOC, "2008 Annual Report on the Operation of Deferred Deposit
Originators under the California Deferred Deposit Transaction
Law.")
In response to concerns that the CFLL's restrictions constrained
access to small-dollar lending, the Legislature passed SB 1146
(Florez, Chapter 640, Statutes of 2010) to create the Pilot
Program for Affordable Credit-Building Opportunities. The Pilot
Program was intended to provide an alternative to higher
interest payday loans and would, until January 1, 2015, allow
participating CFLL licensees statewide to offer a new type of
small-dollar consumer loan that met specified requirements.
Under the Pilot Program, a lender would be permitted to charge
higher interest rates (between 26 and 30 percent), origination
fees, and delinquency fees than are permitted under the CFLL.
The loans, which could be originated in an amount from $250 to
$2,500, would have to be underwritten by the licensee and the
licensee would have to report the borrower's payment performance
to at least one of the three major credit bureaus. The Pilot
Program sought to increase the availability of credit-building
opportunities and to expand financial education for individuals,
particularly unbanked or under-banked persons. SB 1146's
four-year pilot project began on January 1, 2011, and was
scheduled to end on January 1, 2015.
SB 318 (Hill and Steinberg, Chapter 467, Statutes of 2013)
subsequently modified the Pilot Program, renamed as the Pilot
Program for Increased Access to Responsible Small Dollar Loans,
and extended it to January 1, 2018. In response to feedback
received from participants in the Pilot Program established
under SB 1146, SB 318 was intended to expand the number of
lenders offering loans between $300 and $2,500 by, among other
things, authorizing an underwriting fee, increasing the
origination fee, interest rates, late fees, and the frequency
with which underwriting and origination fees could be assessed.
This new Pilot Program authorized lenders to offer installment
loans at an interest rate of up to 36 percent on principal
amounts up to $1,000, and 35 percent on principal amounts
between $1,001 and $2,499. It authorized the collection of
origination fees at 7 percent, late fees at $20 per occurrence,
and set loan lengths between 90 and 180 days depending on the
principal amount lent at origination.
Under the current Pilot Program, participating lenders are able
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to enlist "finders" to work on behalf of the lender to connect
potential borrowers with the lender, but the program restricts
both the activities and the rates of compensation of finders
operating under the pilot. SB 253 (Block, Chapter 505, Statutes
of 2015) sought to improve participation in the Pilot Program by
expanding the services that a finder is authorized to perform.
This bill authorized finders to offer new services, including
disbursing loan proceeds and receiving loan payments from a
borrower, and also increased the cap on compensation that could
be paid to finders participating in the pilot.
In order to allow the Legislature to evaluate the effectiveness
of these programs, both the original and modified pilot programs
required the Commissioner of Business Oversight (formerly the
Commissioner of the Department of Corporations) to report on the
utilization of the programs and to make recommendations
regarding whether the programs ought to be continued after their
terminal date. The last such report due from the Commissioner
is to be delivered to the Legislature on or before January 1,
2017.
This bill would remove the January 1, 2018, repeal date for the
Pilot Program for Increased Access to Responsible Small Dollar
Loans, thereby extending the program indefinitely. This bill
was approved by the Senate Committee on Banking & Financial
Institutions on April 6, 2016, by a vote of 6-1.
CHANGES TO EXISTING LAW
Existing law , the California Finance Lenders Law (CFLL),
administered by the Department of Business Oversight (DBO),
authorizes the licensure of finance lenders, who may make
secured and unsecured consumer and commercial loans. (Fin. Code
Sec. 22000 et seq.)
Existing law caps interest rates that may be charged by CFLL
licensees who make consumer loans under $2,500. Those caps
range from 12 percent to 30 percent per year, depending on the
unpaid balance of the loan. (Fin. Code Secs. 22303, 22304.)
Existing law caps administrative (origination) fees that may be
charged for such loans at the lesser of five percent of the
principal amount of the loan or $50. Existing law also caps the
amount of delinquency fees that CFLL lenders who make consumer
loans under $5,000 may impose. Those fees are capped at a
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maximum of $10 on loans that are more than 10 days delinquent
and $15 on loans 15 days or more delinquent. Existing law
requires CFLL lenders to prominently display their schedule of
charges to borrowers. (Fin. Code Secs. 22305, 22320.5, and
22325.)
Existing law , until January 1, 2018, authorizes the Pilot
Program for Increased Access to Responsible Small Dollar Loans
within the CFLL. (Fin. Code Sec. 22365 et seq.) CFLL licensees
that are approved by the Commissioner of Business Oversight
(commissioner) to participate in the pilot program are allowed
to receive charges for a loan subject to an annual simple
interest rate not to exceed: (1) the lesser of 36 percent or
the sum of 32.75 percent plus the United States prime lending
rate on the portion of the balance, including, but not in excess
of, $1,000; and (2) the lesser of 35 percent or the sum of 28.75
percent plus the United States prime lending rate on the portion
of balance in excess of $1,000, but less than $2,500. (Fin.
Code. Sec. 22370.)
Existing law states that loans under the Pilot Program must have
a minimum principal amount of $300 upon origination and a term
not less than: (1) 90 days for loans whose principal balance is
less than $500; (2) 120 days for loans whose principal balance
is at least $500 but less than $1,500; and (3) 180 days for
loans whose principal balance is at least $1,500. (Fin. Code.
Sec. 22370 (a).)
Existing law provides that a licensee may charge an
administrative fee in an amount not to exceed seven percent of
the principal amount, or $90, whichever is less, on a first
loan, and six percent of the principal amount, or $75, whichever
is less, on a second or subsequent loan. A licensee may not
charge an underwriting fee more than once in any four-month
period, and no administrative or underwriting fee may be charged
in connection with a loan refinance unless at least eight months
have elapsed, as specified. (Fin. Code. Sec. 22370 (c).)
Existing law provides that a licensee may require reimbursement
for the actual insufficient fund fees incurred due to actions of
the borrower, and, may contract for and receive a delinquency
fee that is: (1) for a period of delinquency not less than 7
days, $14; (2) for a period not less than 14 days, $20. No more
than one delinquency fee may be imposed per delinquent payment;
no more than two delinquency fees may be imposed during any
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period of 30 consecutive days. (Fin. Code. Sec. 22370 (d),
(e).)
Existing law states that prior to disbursement of loan proceeds,
a licensee must either offer a credit education program or
seminar, or invite the borrower to a credit education program or
seminar offered by an independent third party, as specified.
(Fin. Code. Sec. 22370 (g).)
Existing law requires a licensee to report each borrower's
payment performance to at least one consumer credit reporting
agency, upon acceptance as a data furnisher by that consumer
reporting agency. A licensee that is accepted as a data
furnisher after admittance into the Pilot Program must report
all borrower payment performance since its inception of lending
under the Pilot Program, as specified. (Fin. Code. Sec. 22370
(g).)
Existing law requires a licensee to underwrite each loan and
states that the licensee shall not make the loan if it
determines that the borrower's total monthly debt service
payments exceed 50 percent of the borrower's gross monthly
income, as specified. (Fin. Code. Sec. 22370 (h).)
Existing law authorizes a licensee who participates in the pilot
program to use the services of one or more finders, as
specified, and defines a "finder" as an entity that, at the
finder's physical location for business, brings a licensee and a
prospective borrower together for the purpose of negotiating a
loan contract. (Fin. Code. Sec. 22371.)
Existing law authorizes a finder to perform one or more of the
following services for a licensee at the finder's physical
location for business: (1) distributing written materials; (2)
providing written factual information about the loan; (3)
notifying a prospective borrower of the information needed to
complete an application; (4) entering information from a
prospective borrower into a database; (5) assembling credit
applications and other materials; (6) contacting the licensee to
determine the status of a loan application; (7) communicating a
response regarding underwriting; and (8) obtaining the
borrower's signature on documents. (Fin. Code. Sec. 22372.)
Existing law states that a finder may be compensated by the
licensee pursuant to a written agreement between the licensee
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and the finder, and that the total compensation paid by a
licensee to a finder may not exceed $65 per loan, plus $2 per
payment received by the finder on behalf of the licensee for the
duration of the loan, when the finder receives borrower loan
payments on the licensee's behalf. (Fin. Code. Sec. 22374.)
Existing law provides that a licensee shall develop and
implement policies and procedures designed to respond to
questions raised by applicants and borrowers regarding their
loans, including those involving finders, and to address
customer complaints as soon as reasonably practicable. (Fin.
Code. Sec. 22370 (f).)
Existing law states that the commissioner may examine the
operations of each licensee and each finder to ensure that the
activities of the licensee and the finder are in compliance with
the requirements of the pilot program, and specifies that in
addition to any other penalty, the commissioner may impose an
administrative penalty up to $2,500 for violations of the pilot
program's requirements committed by a finder. (Fin. Code. Sec.
22377.)
Existing law requires the commissioner to examine each licensee
that is accepted into the program at least once every 24 months.
(Fin. Code. Sec. 22379.)
Existing law requires the commissioner to file reports
summarizing the utilization of the Pilot Program for Increased
Access to Responsible Small Dollar Loans, and specifies
information to be contained within the reports. (Fin. Code. Sec.
22380.)
Existing law provides that the pilot program shall remain in
effect only until January 1, 2018, and as of that date is
repealed. (Fin. Code. Sec. 22381.)
This bill deletes the January 1, 2018, repeal date for the pilot
program, thereby extending the pilot program indefinitely.
COMMENT
1.Stated need for the bill
According to the author:
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California's historical regulatory approach has dramatically
restricted the availability of unsecured installment loans of
less than $2500 dollars for low income borrowers from
underserved communities [with] low or no credit history. . . .
The legislature passed SB 1146 (Florez, 2010), creating a
pilot program that allowed marginally higher interest rates
and slight increases to certain fees (than were currently
allowed in statute) but required the loans made pursuant to
this program to contain significant, specified consumer
protections and responsible lending features that enabled
borrowers to pay back the loans over a reasonable time based
on their ability to repay the loan and allowed them to
establish or improve their credit. This forward thinking
approach provided borrowers with previously unavailable, much
more affordable loan options. In the five years since the
creation of the pilot program, over a half a billion dollars
has been provided to thousands of California families. Many
consumers using the product have been able to establish credit
for the first time and/or have seen dramatic increases in
their credit scores.
The pilot program is set to expire at the end of 2017. The
author and the supporters of the bill believe that this would
be very detrimental to the consumers who have been helped by
this program as well as those who would have been helped had
the program not been allowed to sunset. They believe that it
should be made permanent and that California should send an
immediate, clear signal that it wants [pilot] lending to
continue and remove the sunset.
Just as the pilot is beginning to take on some noticeable
momentum and strength, the looming sunset date creates
uncertainty for the pilot, pilot consumers and for those
lenders in the pilot. The current sunset is also an
impediment to any lender that would like to apply to be a
pilot lender and lend under the pilot. The Center for
Responsible Lending in a report last year concluded that "[a]
sunset would likely end a large portion of the recent growth
in the under $2,500 market that has occurred in recent years,
and the presence of a sunset could be having an impact on new
lenders' decisions to participate in the program."
The pilot is a product of several bills that were heavily
negotiated with all interested parties. It is a success.
With over half a billion dollars loaned in four years of the
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pilot program's existence, it provides a very attractive
alternative in the market that should be celebrated and
encouraged. The author believes that the pilot can only
achieve its full potential and the goals of the Legislature
when it created the pilot by removing the sunset now and
letting it continue to grow and fulfill its purpose of helping
and providing positive loans for underserved borrowers that
need small loans and have limited options.
2.Consumer protection
The Legislature has long considered consumer protection to be a
matter of high importance. State law is replete with statutes
aimed at protecting California consumers from unfair, dishonest,
or harmful market practices. For example, the Consumer Legal
Remedies Act was enacted "to protect the statute's beneficiaries
from deceptive and unfair business practices," and to provide
aggrieved consumers with "strong remedial provisions for
violations of the statute." (Am. Online, Inc. v. Superior Court
(2001) 90 Cal.App.4th 1, 11.) Similarly, for over 70 years,
California's Unfair Practices Act (Bus. & Prof. Code Sec. 17000,
et seq.) has protected California consumers from "unlawful,
unfair or fraudulent business act[s] or practice[s]." (Bus. &
Prof. Code Sec. 17200.)
Consumer protection in the banking and finance sector is no less
a matter of fundamental public policy. The California Finance
Lenders Law (Fin. Code Sec. 22000 et seq.) declares that it
"shall be liberally construed and applied to promote its
underlying purposes and policies," which is, among other things,
"[t]o protect borrowers against unfair practices by some
lenders, having due regard for the interests of legitimate and
scrupulous lenders." (Fin. Code Sec. 22001.) In the past, this
Committee has viewed an annualized interest rate cap of 36
percent on small dollar installment loan products as an
appropriate consumer safeguard. The benchmark 36 percent rate
cap for small dollar lending emerged in the first half of the
twentieth century as a mechanism to control the then-extant
"black market for illegal usurious small loans[] run by loan
sharks." (Saunders, Why 36 [Percent]?: The History, Use, and
Purpose of the 36 [Percent] Interest Rate Cap (April 2013)
(as
of April 12, 2016).) As of 2013, "over 35 jurisdictions - 70
[percent] of states - still provide for annual interest rate
caps at the 36 [percent] benchmark or less within their
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statutory schemes governing small-dollar installment loans by
nonbank lenders." (Id.) The 36 percent rate cap has endured
because it "works on a practical level." A 36 percent interest
rate cap results in payments that "borrowers are more likely to
be able to make while actually paying off the loan," and also
"forces lenders to offer longer term loans with a more
affordable structure and to more carefully consider ability to
pay to avoid write offs" prior to lending. (Id.)
The Pilot Program for Increased Access to Responsible Small
Dollar Loans incorporates elements of the 36 percent interest
rate benchmark. While not inclusive of other allowable fees and
costs, the pilot program limits the interest rate participating
lenders can charge for a loan to, at most, 36 percent. Writing
neither in support or opposition, the Center for Responsible
Lending (CRL) states:
While we support the general goal of expanding access to
credit, it is crucial that such expansions be both affordable
and responsible - so that they help, not hurt consumers in
need. In past efforts to enact and then modify the pilot
program, the Center has actively worked to strengthen the
pilot's consumer protections. . . . The pilot program is not
perfect. The costs for these loans remains higher than we
would like to see. CRL has long endorsed an all-in 36 percent
APR [Annual Percentage Rate] cap on small dollar loans -
including interest and origination fees. The pilot allows
APRs on the smallest and shortest loans of more than twice
that rate.
Despite an effective interest rate over 36 percent (when all
other costs and fees are factored in), CRL has identified the
pilot program as one of California's emerging, less expensive
small dollar loan products. In a December 2015 policy brief
entitled "Predatory Payday and Larger Installment Loans
Overshadow Emerging Market for Smaller, Less Expensive
Installment Loans in California," CRL wrote:
Despite the continued prominence of high-cost debt-trap
lending, some new small-dollar loan providers have begun to
make loans to borrowers with thin or no credit files. These
loans have APRs that are just a fraction of those levied by
payday, car title and high-cost installment lenders. Much of
this lending is happening under California's Small Dollar Loan
Pilot Program, which requires some underwriting to establish
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that borrowers have the ability to repay their loans, some
refinancing limits and requires lenders to report repayment
activity to a major credit bureau.
Opportun, Inc., the sponsor of this bill, has described the
difficulty in constructing small dollar loan products with
affordable total loan costs, writing:
At the time the Pilot was being considered, there were
relatively few unsecured, small dollar, credit-building
installment loans available to low income Californians with
little or no credit history. Small dollar lending is
high-cost and challenging; lenders incur many of the same
expenses with small dollar loans as they would with larger
loans, but with much less opportunity for profit and much more
risk. Despite these daunting challenges, there is an
extraordinary and growing demand for such small loans. This
imbalance between supply and demand drives individuals and
families, particularly those from low income, minority
communities, to rely on expensive, potentially dangerous
financial options that can be harmful to their financial
well-being. . . . The Pilot was predicated on the belief that
the best way to combat predatory and harmful lending is to
encourage and allow more socially responsible lending like
that enabled by the Pilot Program. . . . To incentivize
lenders' participation, it allows Pilot lenders to charge
marginally higher interest rates and fees than those permitted
for consumer loans of that size made outside the program under
the Consumer Finance Lenders Law.
Aside from requiring marginally lower interest rates, the pilot
program includes several other important consumer protections,
including statutory limitations on fees and costs such as
origination and late fees, minimum loan lengths, income
verification and underwriting requirements, restrictions on
refinancing, and mandatory reporting on loan repayment
performance to credit bureaus. While not ideal, the pilot
program offers small dollar loans to consumers on far better
terms than other small dollar loan products offered in
California.
3.Comparison with payday loans
The Pilot Program for Increased Access to Responsible Small
Dollar Loans was created for the purpose of allowing greater
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access to affordable installment loans in principal amounts
between $300 and $2,500. Under the program, interest rates are
capped at 36 percent for principal balances up to $1,000, and 35
percent for principal balances between $1,000 and $2,500. In
contrast, payday loans - a competing small dollar loan product
-- can have exorbitant interest rates. The Department of
Corporations' 2008 annual report on the California Deferred
Deposit Transaction Law found that the average annual percentage
rate (APR) for payday loans was 416 percent.
Although the comparison with payday loans is appropriate, it is
not quite a strict one-to-one comparison for two reasons.
First, the pilot program permits licensees to offer a
small-dollar loan of $300 to $2,500. Payday loans, on the other
hand, are capped at $300 for the face value of the check (minus
a $45 fee, leaving the borrower with $255). As a result, a
borrower who needs a $200 loan cannot access the Pilot Program
and may turn to a payday lender for assistance. On the other
hand, if the borrower could take out a more responsible
longer-term loan for $900 under the pilot program, he or she is
arguably less likely to need to turn to a payday loan. Second,
payday loan borrowers must have bank accounts. The pilot
program does not require that a prospective borrower have a bank
account and, in fact, contemplates that a number of borrowers
who are able to obtain loans under the program are unbanked,
that is, they do not have bank accounts.
The pilot program has two critical elements that further
distinguish its consumer loans from payday loan products.
First, pilot program loans require licensees to report borrowers
to at least one of the three major credit bureaus, thereby
helping borrowers to gain a credit history, unlike payday loans
which are not reported. Second, unlike payday loans, pilot
program loans require licensees to underwrite the loan and
ensure that the loan is affordable to the borrower.
4.Experience under the pilot program
Supporters of this bill widely credit the pilot program with
providing affordable small dollar loans to underserved
populations in California. The Center for Financial Services
Innovation, in support, writes:
The Pilot Program was designed to increase the number of
responsibly-structured, credit-building small dollar loans to
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those with limited access to credit. Prior to the Pilot,
consumers with thin or no credit histories had limited options
when it came to safe, responsible loans. Widely available
options could put borrowers in a worse financial situation:
predatory lending forces many working families into a vicious
cycle of debt, preventing them from ever building assets and
denying them the opportunity to build or repair their credit
histories. . . . The California Small Dollar Loan Pilot has
enabled many thin-file or no-file borrowers to obtain credit
and build their credit score. It has also enabled many
families to access smaller amounts of credit - between $250
and $2,499 - and it has encouraged more lenders to offer these
loans.
Similarly, the Pew Charitable Trusts, in support, writes:
[L]oans offered under [the pilot program] cost far less than
others available, offer borrowers substantial time to repay,
carry small installment payments, and create a clear pathway
out of debt. In 2014, fewer than 200,000 loans were issued
under the pilot, while more than 12 million were issued under
the harmful Deferred Deposit statute in California. Consumers
would be far better off and save hundreds of millions of
dollars annually if lending under the smallloan pilot replaced
the payday loans issued to 1.8 million Californians in the
most recent year.
Lender participants in the program also note its positive
benefits. Credit Shop, Inc., which makes loans through the
pilot program, writes:
Credit Shop was approved to begin lending under the California
Pilot Program for Increased Access to Responsible Small Dollar
Loans in 4th quarter 2015, and we just started marketing to
consumers and making loans in California under this program in
February 2016. Our first marketing campaign yielded favorable
results with a 1.42 [percent] gross response rate. The median
income of our CA applicants is $32,500. 42 [percent] of our
applicants have income below $30,000 per year and 16 [percent]
are under $20,000 per year. 60 [percent] of our borrowers in
California make 2 times or less the state minimum wage.
Making loans under this pilot program in California is a core
part of our company strategy as we believe that there is a
great need for more affordable financial products for [low to
moderate income] consumers in California. Based on U.S.
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Census bureau data (2010 - 2014), around 16.4 [percent] of
California consumers are living at or below the poverty level.
That equates to nearly 6.5 million consumers who may have
limited income and options for loans when they need them.
While the Department of Business Oversight (DBO) has yet to
release its final report on the utilization of the pilot
program, an initial report issued in June 2015 suggests that
loan activity under the pilot is experiencing double-digit
growth, and that charge-off or default rates for pilot
participants at about 8 percent are significantly below that of
other installment lenders. (See DBO, Report of Activity Under
Small Dollar Loan Pilot Programs, June 2015
[as of Apr. 12,
2016].)
5.Removal of sunset
Opportun, Inc., the sponsor of this bill, argues that removal of
the sunset provision from the pilot program would incentivize
additional lenders to become participants in the program and
expand the program's reach. They write:
The Pilot and the loans made under it are a creation of
statute. If the statute expires, much of the lending
currently done under the Pilot goes away or evolves into
something that is much less beneficial to the hundreds of
thousands of borrowers who have benefitted from the program
and the even greater number that could benefit in the future.
Just as the Pilot is beginning to take on some noticeable and
encouraging momentum and strength, the looming sunset date
creates uncertainty for the Pilot . . . The current sunset is
also an impediment to any lender that would like to apply to
be a Pilot lender and lend under the Pilot. . . . Businesses,
particularly those that are contemplating substantial
investment like what is required to successfully make Pilot
loans in any meaningful volume need certainty and reassurance
that the program will continue. At this point with the
Sunset, the Pilot doesn't have or provide certainty. Few
businesses are willing to gather the capital necessary, hire
employees, obtain locations and incur the many additional
business expenses for the chance to perhaps lend for a period
of slightly over a year or even 2 years. . . . Current Pilot
lenders, prospective Pilot lenders and the hundreds of
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thousands of borrowers that benefit from the Pilot need the
Legislature to signal as soon as possible with passage of SB
984 that the Sunset will be removed, thus providing the
reassurance needed to enable future growth in responsible
Pilot lending.
Insikt, Inc., another small dollar lender participating in the
pilot program, argues in contrast that removal of the sunset
date is premature, and suggests instead that the pilot program
be reauthorized until January 1, 2020. They write:
We fully support making the pilot program permanent at an
appropriate time. However, we believe it is premature to do
so until more data is available to demonstrate the program has
met its original goal - to increase consumers' access to
capital by encouraging multiple lenders and finders to develop
a robust small dollar loan marketplace in California.
Insikt, Inc., notes how the Department of Business Oversight
(DBO) has only published its first report on the pilot program,
and that an updated report is expected at the beginning of 2017.
They note how, in that report, the Department states:
The current version of the small dollar pilot program has been
operational for just one year. The DBO recommends
policymakers give the program more time to work before making
changes. Recommendations for improvements, at this time,
would be premature. (DBO, Report of Activity Under Small
Dollar Loan Pilot Programs, June 2015
[as of Apr. 12,
2016].)
Insikt, Inc., further notes how expected rules on payday loans
from the Consumer Financial Protection Bureau may increase
consumer demand for alternative small dollar loan products and
may require that changes be made to provisions of the pilot
program. Listo, Inc., an additional pilot program lender
opposed to this bill, raises similar concerns and argues that
more experience and data with the pilot program would allow the
Legislature to improve upon it and possibly diversify the range
of loan products offered under the program. While additional
data may indeed show the need for changes to the pilot program,
removal of the sunset provision would not deprive the
Legislature of the ability to make such changes via future
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legislation.
Support : African-American Farmers of California; Brightline
Defense; California State Council of Laborers; California
Teamsters Public Affairs Council; California Urban Partnership;
Capital Good Fund; Center for Financial Services Innovation;
Credit Shop, Inc.; Fathers and Families of San Joaquin; Fresno
Area Hispanic Foundation; Greenlining Institute; Hispanic 100;
Latin Business Association; National Federation of Filipino
American Associations; National Hmong American Farmers; Nisei
Farmers League; Otay Mesa Chamber of Commerce; Pacoima
Beautiful; Pew Charitable Trusts; Salvadoran American Leadership
and Educational Fund; Silicon Valley Community Foundation;
Silicon Valley Leadership Group; Western Center on Law and
Poverty
Opposition : Insikt, Inc.; Listo, Inc.
HISTORY
Source : Opportun, Inc.
Related Pending Legislation : None Known
Prior Legislation :
SB 253 (Block, Ch. 505, Stats. 2015) See Background.
SB 318 (Hill and Steinberg, Ch. 467, Stats. 2013) See
Background.
SB 1146 (Florez, Ch. 640, Stats. 2010) See Background.
Prior Vote : Senate Banking and Financial Institutions Committee
(Ayes 6, Noes 1)
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