A bill that its sponsor describes as “a compromise” on payday loan reform emerged from an Alabama Senate committee Wednesday. SB 91, sponsored by Sen. Arthur Orr, R-Decatur, is called “Colorado-style reform,” because it models changes to consumer lending laws approved by that state in 2010.

The bill now awaits a Senate vote. No other payday or auto title lending reform legislation has been introduced so far during the 2016 regular session.

SB 91 would cap payday loan interest rates in Alabama at about 180 percent a year. The payday loan industry has continued to exist in Colorado after that state’s reforms, but it was reduced in size. The number of defaults and bounced checks also have declined.

The bill cleared the Senate Banking and Insurance Committee, with at least three senators voting against approval. Committee members opposing SB 91 were Sens. Bill Holtzclaw, R-Madison; Shay Shelnutt, R-Trussville; and Tom Whatley, R-Auburn. Whatley moved to carry the bill over, which would have delayed a vote on it, but the committee rejected that motion. No public hearing was held on SB 91, but the measure sparked considerable discussion among committee members.

Orr repeatedly described his bill as “a middle ground” between consumer advocates and the payday loan industry. Arise, Alabama Appleseed and other consumer groups long have pushed for interest rates on payday loans to be capped at 36 percent a year in Alabama. (Current state law allows rates of up to 456 percent a year.) Payday lenders oppose any such change.

By Stephen Stetson, policy analyst. Posted Feb. 17, 2016.