Friday’s Arizona Republic includes this STRONG endorsement to VOTE NO on 200.  The Republic became the TENTH newspaper in the state to endorse No on 200:

A heavy-hitting list of opponents isn’t the only reason to vote “no” on Proposition 200. But the breadth of opposition is a measure of the problems in the payday-loan initiative.

The ranks of the opposition include AARP Arizona, the Chandler and Greater Phoenix chambers of commerce, Valley of the Sun United Way and the Arizona Ecumenical Council.

Why are they concerned? Because this is an industry-written “reform” package that has very little to do with protecting consumers and a lot to do with letting payday lenders operate by their own rules in perpetuity. Once passed, ballot measures can’t be changed without voter approval.

The payday-loan business didn’t exist in Arizona until 2000, when the Legislature opened the door by exempting it from the state’s 36 percent cap on the annual interest rate on consumer loans. The exemption, which allowed lending at the annual equivalent of 460 percent, ends in 2010.

Payday lenders contend that they help out cash-strapped customers who just need some money until their next paycheck. But consumers can get caught up in a spiral of debt.

Just look at the military. So many service people were carrying so much payday-loan debt that it was interfering with performance and readiness. In 2006, Congress stepped in and prohibited loans to the military at annual interest rates above 36 percent. Fifteen states have capped consumer lending at that level or below.

When North Carolina did so, payday lenders pulled out. What was the impact on consumers? A study found that the vast majority of households were unaffected. They used an array of other options for dealing with financial shortfalls, including delaying payments, getting loans from finance companies and borrowing from family and friends.

Proposition 200 makes only limited improvements in the structure of payday lending. Loans couldn’t be rolled over. Customers could enter a repayment plan once a year – if they requested the option before the loan was overdue. But the big selling point, a “substantial” reduction in interest rates, would simply close a loophole allowing lenders to charge 17 percent more than the Legislature intended.

The way to reform payday loans isn’t through an industry-drafted initiative that can never be changed. Voters should say “no” to Proposition 200.