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Founder, CFP® Joel Ohman

UPDATED: Apr 18, 2013

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California politicians voted down a bill that would have increased regulation on payday lending during a Wednesday meeting of the Senate’s banking committee.

The bill, SB 515, would have prevented borrowers from taking out more than four payday loans in one year. It also called for stronger vetting of payday loan borrowers’ ability to pay and would have extended borrowers’ repayment periods.

Five members of the California Senate Banking and Financial Institutions Committee voted against the bill, three voted for it and one member abstained.

Though the committee does not release how each member of the committee voted, representatives from the Center for Responsible Lending believe committee head Sen. Lou Correa voted against the bill. Correa is one of the top ten receivers of campaign funds from payday loan lobbyists in the state.

In a statement to, Sen. Hannah-Beth Jackson, who wrote the bill, expressed her disappointment with the vote.

“I’d hoped that more committee members would have been willing to stand up to the industry. I will continue to push the issue until we have reasonable controls over these predatory lending practices, which adversely impact the poorest among us.”

According to Jackson, the vote consisted of Correa, Roth, Calderon, Walters and Berryhill voting against moving the bill forward and Beall, Corbett and Hill voting in support of it. Hueso abstained.

Jackson, however, plans to continuing working towards payday loan reform in California.

“Even though the bill was not voted out of committee yesterday, it is not dead. It was granted ‘reconsideration,’ meaning it can be taken up again at a later date,” Jackson said.

As previously reported, the bill was not expected to move forward in the same form Jackson intended. Due to the strength of the payday lobby, and its financial support of several members of the banking committee, it was expected that the bill would be modified to allow borrowers six payday loans a year.

SB 515 also called for extending loan repayment terms to 30 days for every $100 borrowed, but it was believed that the 30-day term would have been applied to the entirety of the loan. Currently payday loan terms are no longer than 31 days, and the fees are capped at 15 percent on cashed checks.