Payday loans. Reviled by some and embraced by others, they have become fodder for political drama under the Capitol dome.
Some of our state lawmakers say they are looking out for our best interests as they consider inviting payday lenders back to Pennsylvania. They say the loans would broaden credit opportunities in a regulated fashion and protect desperate families from being pillaged by illegal online lenders.
Other lawmakers say they're looking out for our best interests by keeping payday loans out of reach, as other states do. They cite the high costs — triple-digit interest when computed annually — and the potential for borrowers to be stuck in debt long-term.
A select few lawmakers — the Republican House leaders — apparently were thinking only of themselves when they tried to pull a fast one with this flammable topic last week during last-minute budget talks. That blew up in their faces, as it should have.
Payday loans aren't outlawed now. But lenders don't have storefronts here because it's not worth their while. State law caps interest rates on small-dollar loans at about 24 percent, too low to make them profitable.
On July 1, House leaders inserted language in the state fiscal code that pledged House and Senate support for payday lenders to set up shop.
"It is the intent of the Senate majority leadership and the House majority leadership to pass legislation [by Oct. 31] establishing a fee schedule of rates and charges to replace those currently being charged," the fiscal code read when it left the House.
But Senate majority leaders weren't on board with that plan. And while they're also Republicans, they didn't like House leaders speaking for them.
That ignited a chain of events that the governor says could interrupt the flow of state money, not to mention House members' summer siesta.
"That intention doesn't exist," said Sen. Pat Browne, a Republican from Allentown. "So it's a communication of something that's not true."
The Senate is debating a bill sponsored by Browne that would change state banking law and permit "micro-loans," which Browne says will be different than the much-maligned traditional payday loans.
But Browne, being upfront and realistic, said his bill hasn't garnered enough support to move forward for a certain vote by Halloween.
"Using a budget-related vehicle as a means to express this intention, which doesn't exist now, was not an appropriate means to accomplish it," Browne told me.
The Senate showed its displeasure with the House by unanimously voting July 3 to amend the fiscal code by removing the payday language.
"The Senate didn't agree to include this paragraph in the fiscal code, and we were surprised to see it there when we received the bill from the House," Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware, said in an email. "On top of that, there was no mention of the paragraph in the bill's title — a potentially fatal flaw, constitutionally. Given those two factors, we saw no alternative but to remove it."
The House has spent the past week playing down the issue.
What happened occurs in Harrisburg all the time and some people are "looking way deeper into this than it needs to be," said Steve Miskin, spokesman for House Speaker Sam Smith, a Republican from Jefferson County.
Miskin told me the language was nonbinding and meant simply to be a reminder that payday legislation is an important issue that should be taken care of.
"It would not have had any real effect or any basis in law that it has to get done," he said
Clearly, though, there was a motive behind this. If nothing else, it would have put political pressure on Senate leaders not to let payday legislation die as they did last year after the House approved it. If they did, the House could say the Senate failed to follow through despite having its intent written into law.