04/09/2025 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."                                                                            
                                                                                                                                
9:10:02 AM                                                                                                                    
                                                                                                                                
SENATOR FOREST DUNBAR,  SPONSOR, introduced the legislation,                                                                    
which  involved regulations  for  payday lending  businesses                                                                    
imposing  a   36  percent  cap  and   removing  the  current                                                                    
exemption.  He continued  that Alaska  would  join 19  other                                                                    
states that established  the 36 percent APR  cap. There were                                                                    
also federal  laws that prevented businesses  from targeting                                                                    
loans for service members and their families.                                                                                   
                                                                                                                                
LIZ HARPOLD, STAFF, SENATOR DONNY  OLSON, explained that the                                                                    
bill sponsor had  submitted a couple of changes  to the bill                                                                    
that would be incorporated  into a Committee Substitute (CS)                                                                    
that  the committee  would consider.  The changes  clarified                                                                    
that  pawnbroker business  activities,  unrelated to  payday                                                                    
loans,  were exempt  from the  legislation; and  that mutual                                                                    
savings banks were  not affected by the  legislation as they                                                                    
were already governed by existing statutes.                                                                                     
                                                                                                                                
Co-Chair  Stedman MOVED  to ADOPT  the committee  substitute                                                                    
for  SB   39,  Work   Draft  34-LS0357\I.  There   being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair  Stedman  asked  for clarification  from  the  bill                                                                    
sponsor. He  did not think  the bill was time  sensitive but                                                                    
wanted to make sure members  understood the impacts of loans                                                                    
that were  up to $25,000.  He thought the committee  had not                                                                    
spent much  time discussing  larger loans  with accumulating                                                                    
interest charges. He wanted to  understand the impact on the                                                                    
marketplace. He  understood that  commercial banks  were not                                                                    
in the  market with the  smaller loans and wanted  to ensure                                                                    
there was still access.                                                                                                         
                                                                                                                                
Co-Chair Hoffman  noted that there were  three people online                                                                    
to answer questions.                                                                                                            
                                                                                                                                
9:14:13 AM                                                                                                                    
                                                                                                                                
Senator  Dunbar understood  that  in other  states that  had                                                                    
passed  such   legislation,  there  were   more  traditional                                                                    
lending institutions  that would fill the  gap. The entities                                                                    
that had done  the rollover had done very  small amounts. He                                                                    
thought there  was a  letter of  support from  a traditional                                                                    
lender in  the state,  which indicated that  it did  want to                                                                    
service  a  portion of  the  market.  He discussed  personal                                                                    
experience  with taking  out  a  relatively short-term  loan                                                                    
from  a traditional  lender. He  thought there  were profits                                                                    
from traditional lenders in the  space. He mentioned a study                                                                    
referenced by Senator Kiehl at  the last bill hearing, which                                                                    
had compared  individuals on  the edge  of qualifying  for a                                                                    
loan. It was  found that the individuals  that qualified for                                                                    
the  loan  were more  likely  to  default  on the  loan.  He                                                                    
concluded that those that took  out the loan had damage from                                                                    
the product and became more  vulnerable than if they had not                                                                    
taken out the loan.                                                                                                             
                                                                                                                                
Senator Kiehl  MOVED to REPORT  CSSB 39(FIN)  from committee                                                                    
with  individual recommendations  and attached  fiscal note.                                                                    
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CSSB 39(FIN)  was REPORTED out  of committee with  three "do                                                                    
pass"  recommendations, four  "no recommendations";  and one                                                                    
new fiscal  note from the Department  of Commerce, Community                                                                    
and Economic Development.                                                                                                       
                                                                                                                                
9:17:19 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:19:07 AM                                                                                                                    
RECONVENED