Legislature(1995 - 1996)
02/01/1996 01:45 PM Senate L&C
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
February 1, 1996
1:45 p.m.
MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator John Torgerson, Vice-Chairman
Senator Mike Miller
Senator Jim Duncan
Senator Judy Salo
MEMBERS ABSENT
None
COMMITTEE CALENDAR
SENATE BILL NO. 157
"An Act relating to the regulation of small loan and retail
installment transactions."
SENATE BILL NO. 186
"An Act relating to partnerships; amending Alaska Rules of Civil
Procedure 20 and 24; and providing for an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 157 - See Labor & Commerce minutes dated 5/4/95.
SB 186 - No previous Senate action.
WITNESS REGISTER
John Higgins
Northland Credit
3031 Brookview
Anchorage, AK 99504
POSITION STATEMENT: Supports SB 157.
Willis Kirkpatrick
Division of Banking, Securities, and Corporations
Dept. of Commerce & Economic Development
P.O. Box 110807
Juneau, AK 99811-0907
POSITION STATEMENT: Supports SB 157.
ACTION NARRATIVE
TAPE 96-8, SIDE A
Number 001
SB 157 SMALL LOANS & RETAIL INSTALLMENT SALES
CHAIRMAN TIM KELLY called the Labor and Commerce Committee meeting
to order at 1:45 p.m. The first order of business was SB 157.
SENATOR KELLY asked witnesses to confine testimony to the proposed
committee substitute before committee members.
JOHN HIGGINS, general manager for Northland Credit Corporation,
gave the following overview of the measure. The purpose is to
modernize and update the Alaska Small Loans Act. It will expand
the availability of credit to the Alaska consumer, and will allow
Alaska-based lenders to compete with out-of-state lenders who
import interest rate structures from their home states into Alaska.
This legislation will create and retain jobs in Alaska's financial
industry, will provide more local financing to rural communities
and provide credit to a broader base of Alaskan consumers who might
otherwise not have access to the credit they deserve.
MR. HIGGINS explained the changes made to the proposed committee
substitute. Additional fee enhancements were worked out with the
Administration and added in the first two pages. In particular,
the bonding requirement was increased to $25,000. An adjustment
was also made to the amount of the annual licensing fee. In
Section 8 on page 4, language changes were made to the joint loan
provision. Under the current statutory loan provision, a business
cannot have two open loans simultaneously. Language was added to
Section 9 related to non-filing insurance in lieu of filing a UCC1
(insurance in lieu of perfecting a security interest as long as the
premiums do not exceed the fees that would otherwise be charged if
one did file a UCC or security interest). In Section 10 the late
payment fee was changed to $25 or ten percent of the payment due,
rather than what was commercially reasonable. The Administration
did not want to have to keep revisiting the issue of what is
commercially reasonable. Section 14 is an attempt to deregulate a
particular part of the market to equalize the competitive field
with out-of-state lenders who import rate structures into the
state. He informed committee members that the industry component
behind this legislation is: Northland Credit, Norwest Financial,
AVCO Financial, JC Penney and other retailers under portions of the
statute, Affordable Loan, and Superior Financial Services.
Number 126
WILLIS KIRKPATRICK, Division of Banking, Securities and
Corporations, Department of Commerce, limited his comments to the
Savings and Loan portion of the bill. He noted his appreciation
for the cooperation of the industry in straightening out some of
the problems caused by obsolescence. The changes made in the
proposed committee substitute are well within the reasons of
consumer protection, and the Division does not object to them. The
major change under the installment retail portion, which eliminates
credit limitations, has a broad scope. The Division does not
regulate, or have enforcement powers over the regulation of,
interest rates with the exception of those found in the Alaska
Banking Code. The Division often receives comments and complaints
from consumers concerning consumer lending.
SENATOR KELLY asked if the Division supports the bill. MR.
KIRKPATRICK responded affirmatively.
Number 154
SENATOR DUNCAN asked Mr. Kirkpatrick if the Division supports the
change to the competitive market rate. MR. KIRKPATRICK stated it
does. He explained the Division conducts a lot of interstate
banking with the states of Washington, Oregon, and Idaho. In those
states the marketplace determines the interest rate and they do not
understand why Alaska doesn't go with the market rate.
Number 179
SENATOR TORGERSON moved adoption of the committee substitute for SB
157. There being no objection, the motion carried. SENATOR
TORGERSON moved CSSB 157 (L&C) out of committee with individual
recommendations. There being no objection, the motion carried.
SENATOR KELLY announced SB 186 would be postponed until next
Thursday. He adjourned the meeting at 1:55 p.m.
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