Davis Votes 'No' To Loanshark Bill

State Rep. Tina Davis, D-Bucks, said she voted against legislation this week that would essentially legalize loansharking. The House voted 102 to 90.

"While sponsors of this bill insist that it protects consumers, the reality is that it opens the floodgates to predatory lenders," Davis said. "The loans authorized under House Bill 2191 are not short-term, quick financial fixes, but instead would allow for an extremely high interest rate that would ultimately force consumers into worse financial disrepair."

Sponsors of the bill maintain it would protect consumers. Proponents of the legislation claim they are trying to rein in abusive Internet payday lending, but Davis said this is already illegal in Pennsylvania.

Similar laws in other states have forced consumers into multiple payday loans a year – 76 percent of payday loans are to repeat borrowers, Davis said.

Davis said one of the companies pushing for enactment of the legislation – Cash America – is the same company that the state Supreme Court prohibited from making illegal Internet payday loans to Pennsylvanians. In its decision, the court explained that Cash America's business model is to charge astronomical interest rates.

Pennsylvania has long permitted small-dollar loans to carry annual interest rates as high as 24 percent.

House Bill 2191 now goes to the Senate for consideration.