The Iowa Legislature is scheduled to debate bills this week that take some of the actions Democrats promised voters in the last election. On Tuesday, the Iowa House will vote on a bill that would raise the minimum wage in Iowa to $7.25 on January 1st of next year. The Senate is expected to take up the bill on Wednesday. House Democratic Leader Kevin McCarthy says the House will also act this week on a bill that would crack down on so-called car title loans.
“Our hope is that they play by the same rules that banks and credit unions have to play by,” McCarthy says. McCarthy and other critics say some car title loans carry sky-high interest rates of more than three-hundred percent. The bill would limit interest rates to 21 percent and McCarthy says that’s fair since those who default on the loans wind up losing their car.
“Where a pay-day lender of check-and-go would merely take you to small claims court or ding your credit, they drive away with your car,” McCarthy says. “It’s an extreme, fringe lending practice.” But others, like House Republican Leader Christopher Rants, have defended the industry, saying car title loan companies must charge such high interest rates because of the risk in giving loans to clients who have bad credit.
“We hope…that is not the position of the Republican Party, standing up for loan sharks,” McCarthy says. When Rants had control of the House debate agenda because Republicans had a majority of seats in the House, he blocked bills limiting car title loan interest rates. Democrats now hold more House seats than Republicans and they intend to debate that bill in the Iowa House on Thursday.