Bend over, consumers UPDATE | Arkansas Blog

Tuesday, April 7, 2009

Bend over, consumers UPDATE

Posted By on Tue, Apr 7, 2009 at 9:13 AM

Twittering Rep. Duncan Baird says a committee this morning approved HJR 1004. It would be the third constitutional amendment allowed for ballot referral by the legislature. If in the form shown currently on the legislative website, it would do two things: 1) would lift the interest limit on government bonds. They have been unsellable in the market with the current limits and low interest rates. 2) It would dramatically increase the consumer interest limit from a floating rate now held in single digits by a limit 5 points above the federal discount rate to a flat 17 percent cap. The consumer rate increase primarily benefits car dealers and retailers, banks having won exemption in other ways years ago.

UPDATE: This isn't over. Bankers are fighting the consumer credit element, fearing it could jeopardize their previously won interest exemptions. So competition continues for the third amendment slot (unless somebody wants to rethink the silly right-to-hunt amendment and giving the state legislature still more control on parceling out general revenue to support corporate welfare bond issues.)

Roby Brock thinks Sen. Shane Broadway's idea to obligate general revenues to bond issues for energy efficiency projects -- a windfall for the companies selling the stuff and a bypass around the customary vote required for general obligation bonds -- may get new life this afternoon. Perhaps rolled into the two-headed monster already created. Won't this combination of disparate measures run afoul of Supreme Court dictates on amendments?

UPDATE II: It looks like the legislature will consider sending out a big ol' Rube Goldberg of a constitutional amendment, with so many separate and unrelated features that the state Supreme Court should take one look and strike it from the ballot.

I'm not clear exactly where the compromise stands. But in the form I've linked above, it provides the following: 1) No interest limit on municipal bonds? Check? 2) Vote no longer required on general obligation bonds if issued for "energy efficiency"? Check. 3) Remove the interest rate cap for  retailers like car dealers and furniture stores? Double check. And that last provision is measurably worse for consumers than what I'd seen earlier. In its original form, interest was capped at 17 percent. This amendment makes  the cap 17 percent or 5 percent more than a federal index, whichever is GREATER. If that sticks, it's not an improvement for consumers. The amendment seems to add words to protect banks, too.

Thank you, sir, may I have another butt whuppin'?

This turkey should be slaughtered. Or pared down to the bond proposal. A joint committee will decide its fate Wednesday morning.

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