STAND. COM. REP. NO. 2778

 

Honolulu, Hawaii

                

 

RE:    S.B. No. 3008

       S.D. 2

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

 

Sir:

 

     Your Committee on Ways and Means, to which was referred S.B. No. 3008, S.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO PAYDAY LENDING,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to increase consumer protections in the payday lending industry.

 

     Specifically, this measure:

 

     (1)  Replaces the check cashing law for lump sum deferred deposit transactions with requirements for installment-based small dollar loan transactions;

 

     (2)  Establishes licensing requirements for small dollar lenders; and

 

     (3)  Imposes restrictions upon small dollar loan transactions regarding matters such as interest rates, loan amounts, payment amounts, and multiple loans.

 

     Your Committee received written comments in support of this measure from Catholic Charities Hawaii; Community Alliance on Prisons; Hawaii Alliance for Progressive Action; Hawaii Appleseed Center for Law and Economic Justice; Hawaii Community Assets; Hawaii Habitat for Humanity Association, Inc.; Hawaiian Community Assets; Mental Health America of Hawaii; PHOCUSED; and two concerned individuals.

 

     Your Committee received written comments in opposition to this measure from Hawaii Check Cashing and Maui Loan Inc.

 

     Your Committee received written comments on this measure from the Department of Taxation.

 

     Your Committee finds that this measure closes a payday loan loophole and establishes a regulatory structure for small dollar installment loans, giving workers and families more money to make rent and mortgage payments.  Most consumers who presently take out payday loans face repayment terms that set them up for failure.  When faced with the inability to repay their loans, consumers are forced to choose among disastrous options, such as taking out more payday loans to pay off the initial one, defaulting on their loans, falling behind on their other bills, or declaring bankruptcy.

 

     Your Committee notes that the Department of Commerce and Consumer Affairs has indicated that their special fund expenditure ceiling will need to be raised by $214,000 in order to implement the requirements established in this measure.

 

     Your Committee has amended this measure by reorganizing and consolidating provisions and making numerous technical changes, including technical nonsubstantive changes for the purposes of clarity, consistency, and style.  Your Committee has also amended this measure by:

 

(1)  Requiring the written agreement for a small dollar installment loan transaction or renewal to contain the authorized interest rate, as well as the annual percentage rate;

 

(2)  Requiring, rather than authorizing, the Commissioner of Financial Institutions to require licensees to register with NMLS;

 

(3)  Reclassifying the failure to complete a licensing application as a ground for a denial of a license rather than as a ground for disciplinary action;

 

(4)  Establishing an unspecified fee for office relocations;

 

(5)  Including a conforming amendment to section 480F-3, Hawaii Revised Statutes; and

 

(6)  Closing the six-month gap between the repeal of the deferred deposit law and the start of the new licensing law by establishing a January 1, 2019, effective date for both.

 

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3008, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 3008, S.D. 2.

 

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

 

 

 

 

________________________________

DONOVAN M. DELA CRUZ, Chair