MONTGOMERY, Alabama — The Alabama House of Representatives on Thursday voted to create a state database to enforce an existing $500 limit on how much people can borrow at one time from the short-term lenders
Representatives passed the bill on a 93-1 vote. The successful floor vote came after two years of efforts to get the database started. The bill now moves to the Alabama Senate.
"I'm ecstatic. We got something. It's a first step," said Rep. Patricia Todd, D-Birmingham.
Existing law prohibits people from taking more than $500 out in loans at one time. Todd said that without a central database, customers go from lender to lender taking out multiple loans exceeding the cap. She says that traps people in a cycle of high-interest debt.
The Alabama Banking Department last year moved to start the database after legislation failed. Lenders filed a lawsuit. Todd said the bill, if it wins final passage, will allow that database to move forward again.
The bill passed by the House does not include interest rate caps that Todd had sought to place on the loans.
Some lenders opposed the creation of a database, saying borrowers won't want to have their names in one.
"House Bill 145 is both anti-consumer and anti-business," said Max Wood, president of lender coalition Borrow Smart of Alabama. "The database will limit the choices of hard-working Alabamians who take out short-term loans in times of need, forcing them to instead turn to unlicensed, unregulated, more expensive forms of credit."
Speaker of the House Mike Hubbard, R-Auburn, said the bill was a compromise.
"What we are trying to do is cut down on the abuse, and people getting into trouble. This will do that, I'm absolutely convinced," Hubbard said.
Todd said she was cautiously optimistic that the bill will pass in the Alabama Senate.
"I'm going to do all I can to get that through," said Senate President pro tempore Del Marsh, R-Anniston.