A bill that would have tightened regulations on payday loans is dead, according to its sponsors.

Senate President Peter Groff, D-Denver, a co-sponsor of House Bill 1310, said they pulled the plug on the legislation because of amendments added in the Senate that he said weakened the measure.

"What we did in the Senate makes the process worse," Groff said of the bill. "We went to a situation where consumers were in a position of really being gutted by the industry."

Although the Senate had passed the bill, it was sent to the Senate Appropriations Committee. Groff said he decided not to push for the amended bill to make it out of committee.

In its original form, the bill would have capped interest rates on payday loans at 36 percent. But after arguments that such a limit would force many short-term lenders out of business, the Senate amended the bill to cap rates at 45 percent.

Critics of payday loans say that borrowers often pay in excess of 300 percent annualized interest on loans. Short-term lenders say it's unfair to apply an annual percentage rate to payday loans that last only a few weeks — although customers often renew the loans several times.

A coalition of advocates for the poor said the payday lending industry had hijacked the bill.

"The amendments are good for the industry, not the consumers," Rich Jones, director of policy and research at the Bell Policy Center, said in a statement.

Source::denverpost.com