03/20/2025 09:00 AM Senate FINANCE

SENATE BILL NO. 39                                                                                                            
                                                                                                                                
     "An Act  relating to loans  in an amount of  $25,000 or                                                                    
     less; relating  to the Nationwide  Multistate Licensing                                                                    
     System  and  Registry;  relating  to  deferred  deposit                                                                    
     advances; and providing for an effective date."                                                                            
                                                                                                                                
9:18:49 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman asked  Senator Dunbar to come  to the table                                                                    
and present the bill.                                                                                                           
                                                                                                                                
SENATOR    FORREST   DUNBAR,    SPONSOR,   introduced    the                                                                    
legislation. He  noted that he  supported the  previous bill                                                                    
SB 31. He introduced  the legislation with prepared remarks.                                                                    
He offered to have his staff review the sectional.                                                                              
                                                                                                                                
Co-Chair   Hoffman   listed    individuals   available   for                                                                    
questions.                                                                                                                      
                                                                                                                                
9:23:23 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman moved to invited testimony.                                                                                    
                                                                                                                                
CLAIRE   LUBKE,  ALASKA   PUBLIC  INTEREST   RESEARCH  GROUP                                                                    
(AKPIRG) (via  teleconference), testified in support  of the                                                                    
legislation. She relayed that payday  loans were a debt trap                                                                    
that  made things  worse. She  remarked that  it was  common                                                                    
knowledge that  some payday  lenders were charging up to 500                                                                    
percent   interest  on   loans.  Veterans   were  frequently                                                                    
targeted by payday lenders. She thanked the committee.                                                                          
                                                                                                                                
9:26:57 AM                                                                                                                    
                                                                                                                                
ANDY  BARTEL, REVEREND,  ALASKA UNITED  METHODIST CONFERENCE                                                                    
(via  teleconference),  spoke in  support  of  the bill.  He                                                                    
shared  that the  church members  were  struggling. He  read                                                                    
from  prepared remarks.  He implored  the committee  to pass                                                                    
the bill.                                                                                                                       
                                                                                                                                
9:29:30 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:29:42 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Hoffman   OPENED  public  testimony.   He  limited                                                                    
testimony to two minutes.                                                                                                       
                                                                                                                                
CORT WALKER, VICE PRESIDENT OF  PRODUCT AND RISK, CHECK CITY                                                                    
AND ONLINE LENDING ALLIANCE, JUNEAU,  relayed that they were                                                                    
based out  of Provo,  Utah, and spoke  in opposition  to the                                                                    
bill. He relayed that if the  bill passed it would limit the                                                                    
credit options for individuals.  He stated that the consumer                                                                    
was not present saying they did  not want the option. He did                                                                    
not believe prohibition was a smart choice.                                                                                     
                                                                                                                                
9:32:34 AM                                                                                                                    
                                                                                                                                
ELORA  RAYHAN, STATE  GOVERNMENT  AFFAIRS ANALYST,  AMERICAN                                                                    
FINANCE    SERVICES    ASSOCIATION,     SAN    DIEGO    (via                                                                    
teleconference),  provided  details about  the  association.                                                                    
She stated the association's main  concern with the bill was                                                                    
its  definition of  interest. Current  law provided  a clear                                                                    
nationally recognized definition of  interest. She asked the                                                                    
committee to reconsider the definition in the bill.                                                                             
                                                                                                                                
9:35:11 AM                                                                                                                    
                                                                                                                                
CATHY  BRENNAN, ATTORNEY,  HUDSON  COOK  LAW FIRM,  MARYLAND                                                                    
(via  teleconference),  shared  that  the  firm  represented                                                                    
banks and spoke  against the bill. She stated  that the bill                                                                    
would  impair  the  ability  of   banks  to  make  loans  to                                                                    
Alaskans. She thanked the committee for its time.                                                                               
                                                                                                                                
9:37:38 AM                                                                                                                    
                                                                                                                                
REVEREND MICHAEL  BURKE, RECTOR, ST. MARY  EPISCOPAL CHURCH,                                                                    
ANCHORAGE (via teleconference),  testified in strong support                                                                    
of the bill.  He shared that as a pastor  of almost 30 years                                                                    
he  had  seen  the  negative  effects  of  payday  loans  on                                                                    
everyday  families.  He  relayed that  families  were  often                                                                    
drawn to  the funds  but then found  themselves in  debt. He                                                                    
stated  that   the  prior  testimony  about   the  fees  was                                                                    
completely disingenuous.                                                                                                        
                                                                                                                                
9:39:22 AM                                                                                                                    
                                                                                                                                
TERESA WROBEL,  PROGRAM SPECIALIST FOR POLICY  AND ADVOCACY,                                                                    
ALASKA  CHILDREN'S  TRUST, ANCHORAGE  (via  teleconference),                                                                    
spoke in strong support of  the legislation. She stated that                                                                    
the  bill  was  important   because  of  the  payday  loan's                                                                    
negative  impacts on  Alaskan families.  She shared  that in                                                                    
recent years  credit unions had  begun to  offer alternative                                                                    
options  from  payday loans  to  families.  She thanked  the                                                                    
committee.                                                                                                                      
                                                                                                                                
9:41:20 AM                                                                                                                    
                                                                                                                                
JOSEPH RUBIN,  VICE PRESIDENT OF PUBLIC  POLICY, OPPORTUNITY                                                                    
FINANCIAL,    CHICAGO,   ILLINOIS    (via   teleconference),                                                                    
testified against the bill. He  shared that there was almost                                                                    
4,000  loans to  consumers in  Alaska in  2022 and  2023. He                                                                    
stated  that  the bill  had  far  greater impacts  on  loans                                                                    
outside  of payday  loans. He  thought  the information  was                                                                    
being kept from the committee.  He stated that 67 percent of                                                                    
consumers  lived paycheck  to paycheck.  He stated  that the                                                                    
consumers would  have little  access to  credit if  the bill                                                                    
passed.                                                                                                                         
                                                                                                                                
9:43:19 AM                                                                                                                    
                                                                                                                                
ROBERT   SCHMIDT,   DIRECTOR,   DIVISION  OF   BANKING   AND                                                                    
SECURITIES, DEPARTMENT OF  COMMERCE, COMMUNITY, AND ECONOMIC                                                                    
DEVELOPMENT   (via   teleconference),  was   available   for                                                                    
questions only.                                                                                                                 
                                                                                                                                
9:43:48 AM                                                                                                                    
                                                                                                                                
DANIEL  RHEA, SENIOR  DIRECTOR  OF  PUBLIC AFFAIRS,  ELEVATE                                                                    
CREDIT  OF FORT  WORTH,  TEXAS  (via teleconference),  spoke                                                                    
against  the  bill.  He shared  that  the  average  consumer                                                                    
needed online  access to credit,  so consumers were  able to                                                                    
build credit while keeping emergencies at bay.                                                                                  
                                                                                                                                
9:45:43 AM                                                                                                                    
                                                                                                                                
CHRIS GRIMM,  HEAD OF  STATE GOVERNMENT  AFFAIRS, INNOVATIVE                                                                    
LENDING     PLATFORM      ASSOCIATION,     VIRGINIA     (via                                                                    
teleconference),  testified in  opposition to  the bill.  He                                                                    
shared that the  association opposed the bill  that went far                                                                    
beyond the reach of the state.  He shared that it would also                                                                    
impact  the financial  system, and  impact the  Alaska small                                                                    
loan lender. He shared that  the credit crunch caused by new                                                                    
barriers could have  a disastrous impact on  the economy. He                                                                    
thanked the committee.                                                                                                          
                                                                                                                                
Co-Chair Hoffman  recognized Representative Ted  Eischeid in                                                                    
the room.                                                                                                                       
                                                                                                                                
9:47:58 AM                                                                                                                    
                                                                                                                                
ANDREW  DUKE,   CHIEF  EXECUTIVE  OFFICER,   ONLINE  LENDERS                                                                    
ALLIANCE,  ARLINGTON, VIRGINIA  (via teleconference),  spoke                                                                    
against  the legislation.  He noted  that most  loans had  a                                                                    
credit  constraint.   Conventional  loans  came   with  high                                                                    
eligibility  requirements,  they  did   not  come  close  to                                                                    
meeting  demand. The  bill would  reduce credit  options and                                                                    
restrict options available for Alaskans.                                                                                        
                                                                                                                                
9:50:13 AM                                                                                                                    
                                                                                                                                
NICO  REIJNS,  REVEREND,   ANCHORAGE  (via  teleconference),                                                                    
testified  in support  of the  legislation.  He stated  that                                                                    
payday  loan companies  were offering  credits to  desperate                                                                    
people,  but   was  not  helping  individuals   to  navigate                                                                    
resources,  but   rather  would  further  entrap   them.  He                                                                    
provided an example of a  mother who opted for payday loans,                                                                    
but was  not able  to finally  pay it  in full.  He stressed                                                                    
that story  after story showed  there was a need  for active                                                                    
credit, but reform was needed.                                                                                                  
                                                                                                                                
9:52:26 AM                                                                                                                    
                                                                                                                                
PATRICK   BRENNER,   PRESIDENT,  SOUTHWEST   PUBLIC   POLICY                                                                    
INSTITUTE,  NEW MEXICO  (via teleconference),  spoke against                                                                    
the legislation. He shared that  he was a consumer advocate,                                                                    
and felt that  credit unions had not filled the  void of the                                                                    
availability of  loans. He had personally  applied for small                                                                    
dollar  loans, but  he had  been rejected  by all  banks. He                                                                    
stated that  accessing loans was nearly  impossible for most                                                                    
consumers. He did not support the bill.                                                                                         
                                                                                                                                
9:54:40 AM                                                                                                                    
                                                                                                                                
RACHAEL MILLER, CHIEF ADVOCACY  OFFICER, FOODBANK OF ALASKA,                                                                    
ANCHORAGE (via teleconference), testified  in support of the                                                                    
legislation.  She stressed  that when  a family  was hungry,                                                                    
they  were already  in a  vulnerable  situation, and  payday                                                                    
loans  capitalized on  the situation,  resulting in  getting                                                                    
caught in a debt spiral. She thanked the committee.                                                                             
                                                                                                                                
9:56:55 AM                                                                                                                    
                                                                                                                                
EDWARD  D'ALESSIO,   EXECUTIVE  DIRECTOR,   INFIN  FINANCIAL                                                                    
SERVICES  ALLIANCE,  WASHINGTON D.C.  (via  teleconference),                                                                    
testified against  the bill. He  stated that the  bill would                                                                    
eliminate  the  ability for  Alaskans  to  operate as  small                                                                    
lenders. relied  on by thousands  of Alaskans. He  felt that                                                                    
the  bill would  prevent consumers  from over  borrowing and                                                                    
getting  trapped  in  a  cycle   of  debt.  The  bill  would                                                                    
eliminate a  product consumers had  come to rely.  He stated                                                                    
that  the  interest  rate was  very  reasonable  all  things                                                                    
considered.  He  urged  the committee  against  passing  the                                                                    
bill.                                                                                                                           
                                                                                                                                
10:01:01 AM                                                                                                                   
                                                                                                                                
MARGE STONEKING,  ADVOCACY DIRECTOR, AARP  ALASKA, ANCHORAGE                                                                    
(via teleconference), testified in  support of the bill. She                                                                    
supported the 36 percent maximum  interest rate in the bill.                                                                    
She relayed that  high costs of loans were  likely to impact                                                                    
older  Alaskans,  and  stressed that  borrowers  were  often                                                                    
unable to work or return to work.                                                                                               
                                                                                                                                
10:03:03 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman CLOSED public testimony.                                                                                       
                                                                                                                                
Co-Chair  Hoffman  asked  Co-Chair  Stedman  to  review  the                                                                    
fiscal notes.                                                                                                                   
                                                                                                                                
Co-Chair Stedman reviewed the  previously published FN1 from                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development in the amount of -$19,500 general funds.                                                                            
                                                                                                                                
Co-Chair  Stedman  asked  for any  comments  from  the  bill                                                                    
sponsor.                                                                                                                        
                                                                                                                                
Senator Dunbar  thought the  public testimony  reflected the                                                                    
greed  of  online lenders,  and  specifically  spoke to  the                                                                    
comments  from  opposition.  He thanked  the  committee  for                                                                    
hearing the bill.                                                                                                               
                                                                                                                                
Senator Kiehl was interested in  the opinion of the Division                                                                    
of  Banking and  Securities. He  referenced states  that had                                                                    
implemented the  cap. He asked  what happened  to bankruptcy                                                                    
rates in other states.                                                                                                          
                                                                                                                                
Senator Dunbar  deferred to Andrew  Kushner with  the Center                                                                    
for Responsible Lending.                                                                                                        
                                                                                                                                
Co-Chair Hoffman asked to receive  a written response to the                                                                    
question.                                                                                                                       
                                                                                                                                
10:07:04 AM                                                                                                                   
                                                                                                                                
Senator Kaufman heard some dissonance  that he would like to                                                                    
hear more about  pertaining to the flat fee.  He asked about                                                                    
the relationship with pawnshop  loans. He wondered about the                                                                    
black   market.  He   wondered  if   the  bill   closed  the                                                                    
opportunity  whether it  would mean  the black  market would                                                                    
step  in. He  asked if  they would  be creating  a predatory                                                                    
lending situation.                                                                                                              
                                                                                                                                
Senator Dunbar did  felt that the issue was  more related to                                                                    
regulations  about  legalized  gambling because  there  were                                                                    
predatory business owners. He remarked  that the there was a                                                                    
collateral nature to the pawn shop issue.                                                                                       
                                                                                                                                
Senator Kaufman asked about the  disconnect about whether it                                                                    
was a flat fee, and the perpetuation of the loan.                                                                               
                                                                                                                                
Senator Dunbar  stressed that the  key fact was  the rolling                                                                    
over of the loan, which resulted in the compounding loans.                                                                      
                                                                                                                                
10:10:16 AM                                                                                                                   
                                                                                                                                
Senator  Kaufman asked  about the  number of  complaints. He                                                                    
noted  one testifier  stated there  was  only one  complaint                                                                    
since  1993. He  asked  if there  were  more complaints  and                                                                    
where he could find them.                                                                                                       
                                                                                                                                
Senator  Dunbar answered  that the  complaints went  through                                                                    
the Department of Law. People  who used the loans were often                                                                    
not in a circumstance to contact the state to complain.                                                                         
                                                                                                                                
Co-Chair Hoffman asked for any closing comments.                                                                                
                                                                                                                                
Senator Dunbar thanked the committee.                                                                                           
                                                                                                                                
SB  39  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
Co-Chair  Hoffman reviewed  the schedule  for the  following                                                                    
meeting.