A bill that would have altered the interest rate structure on high risk personal loans died on Gov. John Hickenlooper’s desk on Thursday.The governor vetoed House Bill 1390 after consumer groups blasted the bill as being unfair to the poor and one that would have resulted in higher-cost loans.

Supervised loans provide borrowing options for those who may not qualify for other loans. Because they are considered high risk, the loans tend to come with higher interest rates than other lending options.

Supporters of the measure, particularly banking groups, argued that interest rates on supervised loans need to be adjusted so that these kinds of loans can continue to be offered.

Ultimately, the governor was not persuaded by that argument.

“While we certainly see the benefits of offering the loan and credit products that are considered in this legislation, it has not been clearly demonstrated that access to such loans is under threat,” Hickenlooper said in his veto letter.

The governor “was particularly struck” by testimony provided by the Attorney General’s office during a legislative committee hearing. That testimony included an analysis that indicated that changes to interest rate structures would not make these loans more available.

The bill sought to raise the maximum amount of interest charged for supervised loans from 21 to 36 percent for loans up to $3,000. Interest charges would spike from 15 to 21 percent on loans that carry balances of $3,000 to $5,000.

“These changes would result in a 200 percent increase in the loan amount allowed in the 36 percent interest rate tier and a two-thirds increase in the 21 percent interest rate tier,” Hickenlooper said.

Consumer groups praised Hickenlooper’s decision.

“This would have affected moderate to lower income borrowers,” said Rich Jones, the policy and research director of the Bell Policy Center, a left-leaning think tank.

“Some who have these loans have credit problems. This would have significantly increased the cost of the average loan.”

The bill received bipartisan support and sponsorship and the measure cleared the House with just two no votes.

Sen. Cheri Jahn, D-Wheat Ridge, a bill sponsor said she had not had a chance to read Hickenlooper’s letter and therefore could not comment on his reasons for vetoing the bill.

But Jahn, who expects the issue to be taken up again next year, said she hopes the veto does not result in these types of loans becoming scarcer.

“They do not have good credit,” Jahn said of the borrowers. “I would not want to see the industry do away with them because I think it is a good way for people to rebuild credit and get back on track.”

The late introduction of the bill contributed to its demise.

Jones points out that after easily clearing the House, the bill later received 14 no votes in the 35-member Senate. He thinks that’s because lawmakers were starting to realize the issues involved in a bill that was introduced just days before the legislative session ended.

“There wasn’t enough time to have all the views heard,” Jones said.

The governor also acknowledged the quick pace of the bill’s movement.

“We realize the bill moved very quickly before many interested parties could fully consider the full implications of this bill,” Hickenlooper said.

– Twitter: @VicVela1