A nonprofit publication of the Kentucky Center for Public Service Journalism

Amye Bensenhaver: Public right to know; consumer lenders don’t deserve secrecy in disclosures


HB 285, sponsored by Michael Meredith, (R-Oakland), is a 30-page bill that is intended to “modernize” regulation and oversight of these consumer loan companies that are permitted to charge a greater rate of interest “than otherwise permitted by law.”

Whether Meredith’s bill achieves this goal is a topic for another day. But you can add HB 285 to the growing list of bills introduced in the 2019 Regular Session of the Kentucky General Assembly that deprive the public of its right to know. Here, that right is premised on the public’s right to know whether the agency charged with enforcing this modernized regulatory framework, the Department of Financial Institutions, is protecting the public or the lenders.

It is part of an all-out legislative attack on open government in the 2019 Session.

HB 285 sailed through the House, passing by a vote of 95-0 on February 22. Buried in the lengthy bill is a sweeping confidentiality provision that requires the department to conduct its examinations and investigations in secret. Current statutes regulating the consumer loan industry do not require secrecy. Inexplicably, examination reports, investigations, annual reports, and unspecified “confidential and privileged documents, materials, and reports” are closed to public inspection under HB 285. In fact, the bill states that these records cannot be subpoenaed or used as evidence in litigation unless the department determines that it will not be “prejudiced” by disclosure.

“[A]ll other documents, materials, reports, or other information” are open to public inspection unless the department classifies them as confidential “for a period of time” because “the public welfare or the welfare of any licensee or its customers requires [the records] to be withheld.”
Since no legislator questioned the need for absolute secrecy when the bill was presented in committee and on the House floor, it is unclear why HB 285 requires it.

To be fair, similarly restrictive confidentiality provisions appear in current laws under which the department regulates check cashing and deferred deposit services. Less restrictive confidentiality provisions exist for records compiled by the department in regulating mortgage loan companies and credit unions. Even less restrictive confidentiality provisions exist for examination of savings and loan associations.

So it seems that the more “questionable,” and potentially exploitative, the service provided by the regulated entity, the greater the need for secrecy and the less inclined legislators are to question that need.

A cynic might question whether, in these cases, powerful industry lobbyists, or generous industry donors, had a hand in securing legislation that might otherwise expose improper business practices to the light of public scrutiny.

Ample protection exists under Kentucky’s open records law for records containing personal financial information, proprietary records, records relating to open investigations, and even the department’s “internal examining or audit criteria.” The need for secrecy in regulating the consumer loan industry is not self-evident.

It is therefore important that the Senate review HB 285 more critically. It is imperative that someone ask why there is a need for secrecy in regulating these lenders.

For now, we must add HB 285 to the growing list of bills that includes HB 387, sponsored by Representative Jason Petrie (R-Elkton), and SB 193, sponsored by Senator Danny Carroll (R-Paducah), that violate the public’s right to know. Petrie’s bill impedes the public’s right to know how public funds are expended in the name of “economic development” and Carroll’s bill, if amended as expected, violates the public’s right to know in the name of protecting already protected personal information.

One thing is clear: lawmakers are trying to make it easy for public agencies to avoid accountability. The war on open government, it seems, has shifted to the legislature.

Amye Bensenhaver spent 25 years as an assistant attorney general in Frankfort and is an expert on open records and open meetings. Now out of state government, she writes about these issues. She has written more than 2000 legal opinions related to the state’s open records and open meetings laws. If you have questions or comments about Kentucky’s open records laws, please email Ms. Bensenhaver at missbhaver@gmail.com. She is a regular contributor to the University of Kentucky School of Journalism and Media Scripps Howard First Amendment Center Open Government Blog.


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