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<p>INDIANAPOLIS – Legislation on its way to the governor of Indiana may open up payday lending to credit unions in the state. H.B. 1075, which passed the Indiana legislature March 5, sets a maximum payday loan fee of $35 and a minimum loan term of 14 days. That figures out to a 228% APR, according to Philip Goddard, deputy director of the Indiana Department of Financial Institutions. The bill awaits the signature of Gov. Frank O’Bannon. The governor’s office had no immediate comment on whether or not he would sign the bill, but Goddard noted that a representative of the governor testified in favor of the legislation during legislative hearings. By codifying a new type of consumer loan, Goddard said, state-chartered credit unions would be eligible to make the loans. He was unsure whether or not federally chartered credit unions would have the same ability. Chris Beaumont, legislative and regulatory specialist for the Indiana Credit Union League, agreed with Goddard. “They (credit unions) certainly could” make payday loans under the new act, he said. “I suppose it depends on what a credit union’s membership wants.” Beaumont addedt, that “We’ll certainly be getting the information out (to our members).” Two payday lenders in Indiana recently reached a settlement in a class actions lawsuits that forgave $5.1 million in debt and will make millions in cash refunds to customers after the Indiana Supreme Court ruled in August that high-interest-rate payday lending violated the state’s usury laws. Other class action suits are pending. Since that Supreme Court ruling payday lenders have begun to make their loans through out-of-state banks with national charters that were not subject to the Indiana usury laws. But many states are moving to close that loophole. “This is strong legislation,” said Goddard, who further described the pending bill as “the strongest legislation on the subject (of payday lending) in the country.”</p>

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