05/02/2006 08:30 AM House FINANCE

9:41:30 AM                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 315(L&C)                                                                                               
                                                                                                                                
     An Act relating to the disposition of unredeemed                                                                           
     property; and providing for an effective date.                                                                             
                                                                                                                                
                                                                                                                                
ANNETTE  SKIBINSKI, STAFF,  SENATOR  JOHN COWDERY,  explained                                                                   
that pawns  are collateralized  loans, whereby an  individual                                                                   
borrows money  against an item  and leaves the item  with the                                                                   
pawnshop.  The pawner (individual  bringing the item in), has                                                                   
60-days  to make an  interest  payment or pay  off the  loan.                                                                   
Failure to  do so results in  an unredeemed pawn  item, which                                                                   
becomes the property of the pawnshop and can be sold.                                                                           
Ms. Skibinski explained how unredeemed  property currently is                                                                   
handled,  which would  be  changed with  passage  of SB  315.                                                                   
Pawn loan limits  have been regulated by statute  since 1949.                                                                   
Since that time,  the issue has been revised  twice, the last                                                                   
time 13 years ago.  The sale of  unredeemed property has been                                                                   
regulated by statute  since 1981.  Two different  issues were                                                                   
raised in those statutes.                                                                                                       
                                                                                                                                
   · The first is a pawn limit, the maximum amount that can                                                                     
     be loaned on any single item.                                                                                              
                                                                                                                                
   · The second is the handling of unredeemed property.                                                                         
                                                                                                                                
She pointed  out that  the pawn  loan limit  has been  raised                                                                   
over the  years.  Obviously,  the value  of a dollar  and the                                                                   
consumer  price index  has  made the  change  necessary.   In                                                                   
1993, when  the pawn  loan limit  was raised, the  unredeemed                                                                   
property provision remained the  same, causing a disparity in                                                                   
the pawn loan limit to the unredeemed property amount.                                                                          
                                                                                                                                
Ms. Skibinski concluded  that SB 315 restores  the ratio that                                                                   
was  originally  established  between pawn  loan  limits  and                                                                   
unredeemed property.   It does not change the  $500 pawn loan                                                                   
limit,  but  changes  the  language  regarding  the  sale  of                                                                   
unredeemed  property from $400  to $1000,  or twice  the pawn                                                                   
loan limit, as was previously the standard set in 1981                                                                          
9:46:57 AM                                                                                                                    
                                                                                                                                
Representative Weyhrauch asked    clarification   about   the                                                                   
impact of the legislation on the public.                                                                                        
                                                                                                                                
CLYDE  (ED)  SNIFFEN  JR.,  (TESTIFIED  VIA  TELECONFERENCE),                                                                   
ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT  OF LAW,  ANCHORAGE,                                                                   
noted  that consumer  protection  was addressed  by  language                                                                   
inserted at the  end of the bill and requires  the pawnbroker                                                                   
to  provide the  consumer with  notice  that if  they do  not                                                                   
redeem their  property, it becomes  subject to sale.    Those                                                                   
types of transactions  usually pertain to consumers  that are                                                                   
in dire need.  The Department  of Law requested that language                                                                   
to provide protection for the consumer.                                                                                         
                                                                                                                                
9:48:54 AM                                                                                                                    
                                                                                                                                
Representative Weyhrauch inquired     how    pawnshops    are                                                                   
regulated.                                                                                                                      
                                                                                                                                
TERRY LUTZ,  CHIEF FINANCIAL  INSTITUTION EXAMINER,  DIVISION                                                                   
OF BANKING SECURITIES, DEPARTMENT  OF COMMERCE, COMMUNITY AND                                                                   
ECONOMIC  DEVELOPMENT,  stated  that they  did  not  regulate                                                                   
small  loan  shops  or  pawn  shops,  which  are  exempt  and                                                                   
confirmed that the municipalities  individually regulate such                                                                   
activities.                                                                                                                     
                                                                                                                                
Representative Weyhrauch asked  what interest  rate could  be                                                                   
legally  charged  under  the  Small Loan's  Act.    Mr.  Lutz                                                                   
responded that  for loans  up to $850  dollars, 36%  per year                                                                   
could be  charged.   Those businesses  are completely  exempt                                                                   
from the Small Loan's Act, so  there is no limitation on what                                                                   
they can charge.                                                                                                                
                                                                                                                                
9:51:15 AM                                                                                                                    
                                                                                                                                
Co-Chair Chenault MOVED to REPORT  out CS SB 315 (L&C) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS SB  315 (L&C)  was reported  out of  Committee with  a "no                                                                   
recommendation" and  with zero note  #1 by the  Department of                                                                   
Commerce, Community & Economic Development.