M arch 23 , 1 9 8 7 LB 332

SPEAKER BARRETT: Sena tor Vard Johnson, please, on the Schmit amendment, followed by Senator Hall.

SENATOR V. JOHNSON: Mr. Speaker and members of the Legislature, I was going to ri s e an d su g g est th at yo u su p p ort S e n ator Schmit's amendment but I realize as I sat here and listened to Senator Conway speak and I thought about it that you cannot vote for Senator Schmit's amendment. Y o u can 't vote f or Senat o r Submit's am e n dment bec a use h i s a m e ndment d oe s a b s olutely nothing, does absolutely nothing e xcept c a use s om e N e b raska business t o simp l y g o to Sou t h D a k ota t o d o bu s i n ess. Unfortunately during the great usury debates of 19 7 9 le d by Senator Schmit, o f 1980 led by Senator Schmit, and of 1981 led b y Senator Schmit, the l e ssons t ha t w e le a r ned w e r e t h e s e . Number one, a bank in Nebraska may charge as interest whatever the highest allowed interest is. So , if, in fact, the c o nsumer small loan interest for the small loan companies is 24 percent, then under national banking laws and court decisions, thereof, a Nebraska bank ca n ch a r ge 2 4 p e r c e nt e v e n t h o u gh yo ur u sur y l aw says 12 percent. Ther e i s a Gresh a m's law in operation on interest rates, and Gresham's law is that the bad drives out the good, so the highest r ate t h a t t h e st a t e a l l ows u l t imately becomes the standard for national hanks pursuant to the National Banking Act , a n d a Sup r em e C o ur t d e c ision n n th a t point. Secondly, we have now learned of the mobility of m o n ey a n d of credit. When , of , decided to d eregulate it , d e c i ded t h a t S o uth D a k ota w o ul d b e c ome a pathfinder, a trailblazer on usury by simply saying that there will be n o us u r y l aw s i n So ut h D a kota, and making banking operations easier there, the first company to m o ve t o Sou t h Dakota wa s C i t icorp ou t of New York City, and Citicorp set up its credit card business in South Dakota. It set it up in South Dakota because whatever rate it established under th e n o n u sury laws of S o uth Dakota, it could use nationally. They could use it nationally, and we couldn't stop it, and we couldn't stop it. So, I remember in 1981 being a fairly strong p roponent o f the strong usury l a ws, I just threw in the towel. I just threw in the towel. I said, you know, it is so clear at this time in our ocial history that we, as a society, don't even have the tools on a sta t e le v el t o d e al with usury laws. S o, let the banks have their way, let them do as they want to do. Le t u s h ope that enough c onsumers beware an d d o n 't pay those exorbitant interest rates, don't pay that 18 percent or 19 percent on th e credit cards, an d s i m ply g o e ls ewhere i f th e y can find an elsewhere to go to because there is very little that we c a n do

1973