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Payday lending bill doesn't close in session's final day

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At the end of the legislative session, the focus is on what was accomplished, but the Associated Press notes that legislation designed to protect borrowers from falling further into debt with so-called payday lenders stalled in its final day and did not pass.

Gov. Mark Dayton urged lawmakers to pass the bill and the Senate voted to send a bill to the House, which had earlier adopted a different version. But the session concluded before lawmakers could craft a common proposal. Advocates for payday loan legislation can resume their efforts next year.

Payday loans are short-term, high-interest loans that are typically sought by borrowers lacking credit. They allow lenders to withdraw money from the borrower's bank account to pay back loans. In many cases, the lender lets the borrower pay the debt by taking out another short-term loan.

The measure would have offered reforms by limiting borrowers to 10 loans a year and requiring lenders to check whether borrowers are overextended. The proposal also required lenders to determine whether the borrower is a member of the military and cap the annual percentage rate for their loans at 36 percent.

Lawmakers considering the measure heard tearful testimony from a Duluth mother of four who told the Senate committee she got a payday loan that “just started spiraling.” Needing money to buy her kids Christmas presents, she took a loan without realizing how high the interest rate was, then took out additional loans to cover her payments.

But a Blaine worker who said she doesn’t make enough to cover expenses explained that she borrows $150 at a time and pays back $178 – a fair rate, advocates say, when compared to overdraft fees from banks.

Opponents said the bill would encourage debtors to seek out unregulated or dangerous sources of cash, including Internet sources or old-school loan sharks.

The highest profile action taken by the Minnesota legislature in its last day of business was the passage of the medical marijuana legislation, but lawmakers were busy with other last-day action as well. The legislature passed a bonding bill, expanded tax cuts and limited sales by the Minnesota State Lottery. MPR News reports the bill stops lottery from offering online gambling and games at gas pumps. The change could cost the state nearly $12 million.

Gov. Mark Dayton has not said whether he plans to sign the bill.

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