Legislature(2025 - 2026)ADAMS 519
05/15/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB64 | |
| SB39 | |
| HB52 | |
| SB64 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 39 | TELECONFERENCED | |
| + | HB 52 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 64 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 39(FIN)
"An Act relating to loans in an amount of $25,000 or
less; relating to financial institutions; relating to
the Nationwide Multistate Licensing System and
Registry; relating to pawnbroker licensing exemptions;
relating to deferred deposit advances; relating to
computing interest; and providing for an effective
date."
3:47:03 PM
Co-Chair Foster OPENED public testimony. He provided the
email address for public testimony. He noted there were
eight individuals online to testify.
3:48:12 PM
NATALIE LYNCH, INNOVATIVE LENDING PLATFORM ASSOCIATION
(ILPA), WASHINGTON, DC (via teleconference), explained that
ILPA was a trade organization for online lenders and
service companies serving small businesses. She stated that
the bill went far beyond the sponsor's intent of regulating
payday loans. She believed it would negatively impact small
business in Alaska relying on diverse financing options to
meet credit needs. She elaborated that Alaska would be the
fourth state to adopt such a broad regulation. She remarked
that laws in other states were narrowly tailored to small
consumer loans. She stated that the law would apply to any
loan of $25,000 or less, not just payday loans. She noted
that the average payday loan an Alaska borrower took out
was $440. She stated that the bill would severely hurt ILPA
members' ability to supply working capital to Alaska's
small businesses. The bill would also require anyone
holding the predominate economic interest in the loans to
be registered in Alaska. She stated that transferring loans
to nonbank entities was a fundamental aspect of banking
that helped reduce risk. She highlighted that it could also
lead to higher borrowing cost and less capital available
for Alaskan consumers. She added that the bill would
endanger the secondary credit market. The organization
opposed the bill.
3:50:36 PM
CATHY BRENNAN, PARTNER, HUDSON COOK LAW FIRM, BALTIMORE, MD
(via teleconference), shared that the firm represented
banks and fintechs [financial technology] with regard to
consumer financial services laws and regulation. Her focus
was on bank partnerships. She addressed the bill's
provision that recharacterized the bank's service provider
as the true lender on credit transactions. She stated that
the Small Loans Act (SLA) provided an optional licensing
scheme allowing licensed nonbank lenders to contract for a
greater rate of interest than the rate available to
unlicensed lenders. She relayed that currently the SLA did
not require entities that brokered, serviced, or purchased
consumer loans to obtain a license. She stated that
unfortunately the bill would impair highly regulated U.S.
banks from making legal loans to Alaskans. She relayed that
fintech service providers were subject to a high level of
scrutiny from banks and regulators. She provided an
example. Federal law authorized federal and state banks to
export interest rates from their home states to make loans
to borrowers across state lines and allowed banks to work
with third parties in the loan making process. She stated
that the anti-evasion language in the bill ignored the
reality that banks managed their balance sheets by
routinely selling the loans they originated. She provided
an example. She stated that the bill impaired the common
practice and would diminish the availability of consumer
credit in the state. She highlighted that the bill included
commercial lending, which she imagined was likely not the
intent of the bill.
Representative Hannan asked where the anti-evasion language
Ms. Brennan was referring to was located in the bill.
Ms. Brennan responded that the bill would add a new
subsection to Section 4 [subsection (c)(1)] under AS
6.20.010. She read language from the subsection:
"...directly or indirectly holds, acquires, or maintains
the 21 predominant economic interest in a loan..." She
noted there was additional language regarding evasion.
Representative Hannan observed that Ms. Lynch and Ms.
Brennan came from a similar segment of industry. She
remarked that there were not many reasons in most elected
officials' minds not to help protect consumers from
predatory lending practices of payday lenders. She remarked
that Ms. Lynch asserted the entire bill should be stopped.
She wondered if Ms. Brennan had concerns about the payday
lending portions of the bill separate from the SLA
portions. She asked if Ms. Brennan's concerns were
exclusive to Section 4 and the anti-evasion language.
Ms. Brennan responded that her process was focused on
working with banks attempting to offer credit on a
nationwide basis, which was done with the assistance of
service providers frequently referred to as fintechs. She
was concerned the legislation would impair the ability of
banks to exercise their lawful authority under federal law
and the law of their home state. She was most concerned
about the bank partnership. Secondarily, the bill would
limit the ability of commercial entities and businesses in
Alaska to get credit through a bank partnership program.
She explained that it was common for that type of credit
for interest rates to be higher than it would be for
consumer credit given the nature of the underwriting and
type of loans. She did not know that she would refer to
that market as predatory. Additionally, on the consumer
side, there were many consumers who were credit impaired,
who would not qualify for other types of credit. She
understood policymakers needed to make a policy decision on
how to protect consumers. She suggested the legislation
would not protect consumers, but it would hurt them by
making it difficult to get credit.
3:57:12 PM
Representative Hannan asked if Ms. Brennan's use of the
word "consumer" meant a commercial entity or an individual.
Ms. Brennan clarified that a consumer was an individual who
obtained credit for a household or personal use.
Representative Hannan stated most legislators were
interested in providing more protections for consumers
using payday loans. She noted that Ms. Brennan had first
talked about Section 4 related to commercial lending. She
elaborated that Ms. Brennan had also stated the bill would
lose credit for consumers. She had initially thought the
commercial credit was only available to commercial
entities. She thought she understood Ms. Brennan's
concerns.
Ms. Brennan responded that the SLA was an optional scheme.
She explained that that many small loan acts in many states
including Alaska, did not specifically apply only to
consumer credit; therefore, it was broad enough to apply to
consumer and commercial credit made to individuals (sole
proprietors or individuals who own a business). She asked
if her explanation made sense.
Representative Hannan agreed.
3:59:20 PM
REVERAND ANDY BARTEL, SELF, ANCHORAGE (via teleconference),
shared that he had been a resident and safe leader in
Anchorage for the past decade. He testified in favor of SB
39. He detailed that for two years, the Alaska Conference
of the United Methodist Church, had unanimously adopted a
resolution in support of payday lending reform. He noted
that a unanimous vote in the church was about as rare as a
unanimous vote in the legislature. He highlighted that
church members were republicans, democrats, and
independents and the bill did not favor a particular
political perspective. The church believed financial
institutions served a vital role in society, but they must
guard against abuses and deceptive lending practices that
took advantage of the neediest for the gain of the richest.
He underscored that banking regulations must prevent the
collection of usurious interest that kept people in cycles
of debt. He stressed that payday lending in Alaska was
predatory lending extracting millions of dollars from local
impoverished citizens and the local economy. He stated that
short term loans by payday lenders were not the only option
for some individuals. He listed Credit Union One, Spirit of
Alaska Credit Union, Wells Fargo as options for small
dollar short-term loan products that came in under the
proposed 36 percent cap. Prior to returning to Alaska, he
had been a pastor in South Dakota, which also enacted a
similar cap to reform payday lending. He highlighted that
subsequent studies showed the economy had only benefitted
from enacting a 36 percent cap on all lenders. He pointed
out that South Dakota had saved $81 million a year in fees.
He underscored that the bill would make a real and positive
difference for some of the state's most vulnerable
Alaskans. He implored the committee to pass the
legislation. He thanked the committee.
4:02:43 PM
GREG PORTER, ONLINE LENDER'S ALLIANCE, ARLINGTON, VA (via
teleconference), shared that the organization had submitted
written testimony as well. The alliance focused on policy
surrounding credit access and believed that more options
yielded better outcomes for consumers. He stated there had
been a lot of discussion on payday products, but there was
much more in the bill that would impact access to credit
for consumers and small businesses. He detailed that nearly
one-third of Alaskans were considered credit constrained
and Alaskans led the nation in credit card utilization and
had the highest card balances in the U.S. He disputed
claims that lenders would keep making loans to the same
borrowers at lower cost if the bill was enacted. He stated
that if someone needed a couple hundred dollars until their
next paycheck, a lender could charge $1.50 per week in
total fees and interest. He remarked that common sense
suggested that small dollar lenders would not be able to
adequately price for cost or risk and borrowers would see
options dry up. He highlighted there was research from the
federal reserve backing up his statement.
Mr. Porter reported that Illinois applied the same
framework of restrictions as SB 39 and a study showed that
credit access declined for thousands of consumers after the
restrictions were enacted. He referenced some proponents
claims that large legacy banks and credit unions offered
small dollar loans. He stated it was technically true, but
for a small number of individuals. He stated the offerings
did not come close to meeting demand. The bill worked
against more banks entering into the small dollar space. He
explained that states had the ability to extend loans
across state lines and used the assistance of service
providers. He stated that the bill worked to stop banks
from offering loans if they worked with a service provider.
He pointed out that when people lost the ability to access
products to support themselves in a downturn, they were
more likely to turn to government support. He stated that
on a per capita basis, Alaska ranked near the top on public
support payments. He believed the bill would increase the
need. He urged the committee to oppose the bill.
4:06:14 PM
AT EASE
4:06:43 PM
RECONVENED
4:06:54 PM
MIKE COONS, SELF, WASILLA (via teleconference), opposed the
the bill. He stated that the bill was not about poor people
only. He thought the bill boiled down to the government
getting involved in people's mistakes, while government
could not control its spending and borrowing from the
Permanent Fund Dividend. He remarked that the mistakes were
in many cases due to poor education and impulse buying. He
suggested that it did not matter if interest rates were 194
to 521 percent or general lending laws of 39 percent. He
stated that people got into debt and stayed in debt. He
read from the last paragraph of the sponsor statement. He
asked what constituted reasonable interest rates. He
wondered if it was 12, 25, or 39 percent. He relayed the
Discover credit cards had a rate of 18.24 to 27.24 percent.
He stated that people were getting payday loans because
banks would not take the risk. He suggested that the
legislature should go after credit card companies that
allowed multiple credit cards when a person was heavily in
debt. He stated the no amount of government help would fix
the problem. He underscored that the key was teaching kids
responsible financial management. He believed there should
be classes taught on the subject. He was in support of
separate legislation that taught financial literacy.
4:09:46 PM
WENDY GIBSON, CHECK CITY, PROVO, UT (via teleconference),
testified in opposition to the bill. She shared that she is
an Alaska licensed payday lender located in Provo, Utah.
She stated that although SB 39 was a consumer friendly bill
to reduce the cost associated with short-term loans, its
passage amounted to a wholesale prohibition of licensed
short-term lending in Alaska. She highlighted that if the
bill passed, the only entities that would offer loans were
those with no regard for Alaska law. She believed Alaskans
would face fewer choices, higher risk, and greater
financial hardship. She stated that customers deserved
access to credit that was transparent, safe, and regulated.
The company charged a flat fee, did not charge interest,
and its loans were capped at $500. The company was also
subject to strict money rules in Alaska including offering
a repayment plan if customers were unable to pay by the due
date. She stated that in the past year, the Consumer
Financial Protection Bureau had received only one complaint
against an Alaska payday lender. She stated that the
statute had worked well for years. She emphasized that the
bill was not data driven and did not include input from all
stakeholders. She thought the bill would unintentionally
harm people it was trying to protect. She asked the
committee to vote against the bill.
4:12:16 PM
KAY WRIGHT, SELF, NIKISKI (via teleconference), was in
opposition to the bill. He stated that short-term loans
were a priority for some village residents trying to
stretch finances from paycheck to paycheck. He thought the
bill should allow short-term loans to continue. He remarked
that it was sad when a person could not get a loan from a
bank in a remote area.
4:13:26 PM
Co-Chair Foster shared that he would keep public testimony
open for the time being. He provided the email address for
written testimony.
[Note: Co-Chair Foster closed public testimony later in the
meeting at 4:31 p.m.]
4:14:23 PM
SENATOR FORREST DUNBAR, SPONSOR, addressed the idea that
there was something unique or different about the anti-
evasion provision. There was written testimony from the
Center for Responsible Lending in members' bill packets
written by Mr. Kushner that included a section addressing
the topic. He elaborated that it had to do with the service
provider issue Mr. Kushner had spoken about. He highlighted
that it was not a novel language; the language was
identical or near identical to language adopted in Maine,
New Mexico, Washington, Connecticut, and Illinois. He noted
the language had not been repealed in any of those
locations or overturned by a federal lawsuit. He clarified
that the bill did not include a novel expansion and
included standard anti-evasion language.
Co-Chair Foster set an amendment deadline for Saturday at
5:00 p.m.
CSSB 39(FIN) was HEARD and HELD in committee for further
consideration.
4:15:44 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB39 HFIN Follow Up to 5.9.25 Hearing.pdf |
HFIN 5/15/2025 1:30:00 PM |
SB 39 |
| HB052 Additional Documents - Alaska Disability Law Center Findings 05.07.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB052 Additional Document - DOJ Investigation of the State of Alaska Behavioral Health System for Children 05.07.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB052 Legal Memo - Dibert 05.07.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB052 Legal memo - Fields 05.07.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB052 Public Testimony Rec'd by 03.25.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB052 Sectional Analysis Version 34-LS0399 G, 05.14.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB052 Sponsor Statement Version 34-LS0399 G, 05.07.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB052 Summary of Changes Version 34-LS0399 G , 05.07.25.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 52 |
| HB 193 Public Testimony Rec'd by 051525.pdf |
HFIN 5/15/2025 1:30:00 PM |
HB 193 |