February 17th was an interesting day for lending in South Dakota.
House Bill 1126, which was primed by State Representative Mark Mickelson was being heard in House Commerce and Energy Committee for the purpose of exempting certain entities from provisions related to money lending licenses.
It was a bill designed to exempt from regulation any entity which has made or acquired no more than ten loans to other entities within any calendar year and any entity that purchases and services commercial loans acquired for investment purposes. These are typically big dollar loans that are used by groups of investors. It failed, but it boasted a group of sponsors led by Mark Mickelson, and including Representatives Beal, Deutsch, Dryden, Duvall, Harrison, Hunt, Jensen (Alex), Johns, Langer, Otten (Herman), Partridge, Rasmussen, Schoenbeck, Solum, Steinhauer, Verchio, Westra, Wiik, and Willadsen and Senators Curd, Greenfield (Brock), Haverly, Heineman (Phyllis), Peters, and Tieszen.
That same day, House Bill 1161, sponsored by Kris Langer, a bill to provide for and regulate consumer lines of credit, was heard in House State affairs. This bill which passed committee has attracted a lot of grousing from liberals, because it creates a new line of short-term consumer credit. Ironically, Mark Mickelson who sponsored the bill to exempt high-dollar investment lending from state oversight sits on the House State affairs committee and cast a no vote on the short-term consumer credit measure.
So, why is deregulation good for the rich, but low-dollar lending for those of less means is being regulated out of business? It’s not terribly consistent.
Frankly, I have a really hard time with the attitude of overregulation being led by those with a far left point of view on lending. For me, as a Republican, I believe it’s important to allow consumers to make their own decisions, and I would invite Representative Mickelson and the other sponsors of House Bill 1126 to keep that in mind when they vote on House Bill 1161 today.
If you’ve noted what I’ve written about payday lending this past week, South Dakota is one of the beachheads that the opponents of this type of product are trying to establish through the initiated measure process. But, at the same time the opponents of payday lending are trying to kill the competition, they are advocating for the federal government to create a program so they can set up their own program backed by taxpayers.
I can’t help but shake my head at Republicans who rail on about Obamacare this, and Obamacare that, yet at the same time are piping up in crackerbarrels talking about opposing House Bill 1161. Because those who vote against it will be complicit in helping to establish the “Obama Loan” program being developed at the federal level – a government backed loan program that is designed to have government assume the risk that private lenders assume now. So, instead of those getting the loans assuming the risk, The “Obama Loan” program will have taxpayers assuming it.
Why on earth would legislators want to seek a taxpayer funded solution versus one willingly being pursued by the private sector via 1161?
The thing to keep in mind is that the people promoting this sea change in personal lending at the federal level, while they’re pushing ballot measures, and opposing 1161 at the state level are farther left than George McGovern when it comes to taking away freedom and consumer choice. Even McGovern believed that we need to value the freedom to make our own decisions.
As I’d quoted before, McGovern noted ” Since leaving office I’ve written about public policy from a new perspective: outside looking in. I’ve come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society. Why do we think we are helping adult consumers by taking away their options? We don’t take away cars because we don’t like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don’t operate mindlessly in trying to smooth out every theoretical wrinkle in life.”
The vote today on House Bill 1161 comes down to a basic question with our economic system and our political beliefs. Either we value the freedom to make our own decisions free of government coercion, or we don’t.
Today legislators have a clear choice to make. They can vote for free enterprise, or they can vote for more government. It’s their choice.