Dear friend,

The 2010 Legislative session has not even begun, and already we see the nature of the battle we’re fighting.  The payday lenders have bought a few seats at Gov. Brewer’s table — a few very prominent seats — in their attempt to continue charging 400% interest rates to Arizona consumers.

Unbelievably, Gov. Jan Brewer has allowed her chief advisers to lobby for the payday lenders, just as the payday industry attempts to remove the 2010 sunset date that will effectively outlaw its 400% interest rates in Arizona.

The July 1, 2010 Sunset, which the industry attempted to remove with a failed $15 million ballot initiative last year, will force them to abide by Arizona’s 36% usury cap on all consumer loans.

As you know, Arizonans spoke unequivocally on this issue just 12 months ago.

In the 2008 election, nearly 1.3 million Arizona voters stated that the special deal for payday lenders must end.

When the voters rejected the payday lenders’ ballot measure by a 60% to 40% margin, they stated that the sun must set on 400% interest rates.

But as Howard Fischer reported on Friday, the payday loan industry is not willing to go away without a fight.

To stay alive beyond 2010 — and continue charging 400% interest — they’re pushing “reforms” to state legislators and the governor, in return for removing the Sunset.   The industry line today is exactly the same as it was in their efforts to deceive the voters with Prop. 200 last fall.  And, just like then, it’s all smoke and mirrors.

They’re hiding 400% interest rates amidst a myriad of phony reforms that don’t stop the payday loan debt trap.

To do their bidding, the payday lenders have retained former Attorney General Grant Woods, Jan Brewer’s re-election campaign Chairman, and her chief political advisers Chuck Coughlin and Doug Cole — to try to convince the Legislature and Governor Brewer that payday lenders deserve a new lease on life; that they should remain entitled to charge 400% interest rates to cash-strapped consumers across Arizona.

Call Gov. Brewer today and tell her:

“The Voters Have Spoken!  The Sun Must Set on 400% Interest Rates.”

Telephone (602) 542-4331
Toll Free 1-(800) 253-0883

Asked today by the Associated Press whether she thought it was a conflict that her chief advisers were also working for the payday lenders as they attempt to remove the 2010 sunset, Gov. Brewer said she doesn’t “see a problem with it.”

Brewer went on to say that policymakers “will do what’s right for the people of Arizona.”

(Watch Gov. Brewer’s response to repeated questions on payday lending, and possible conflicts of interest with her chief advisers, here.)

Well… The people of Arizona already have spoken on this matter. Loud and clear.

Make sure Governor Brewer got the message:

• The voters said “NO” to 400% interest rates charged by payday lenders.

• The fact that the governor’s chief political advisers now are being paid by those same payday lenders to try to overturn the will of the people, is an insult to her office and undermines her credibility on this and other issues.

• If the governor truly is interested in doing “what’s right for the people of Arizona,” she will immediately drop Coughlin, Cole, and Woods from her re-election campaign or insist that they drop the payday loan industry as a client.  She can’t have it both ways and expect Arizonans to trust her.

Take a minute and call Gov. Brewer right now:

Telephone (602) 542-4331
Toll Free 1-(800) 253-0883

Then email us to tell us how it went.

Thank you,

Sen. Debbie McCune Davis
Co-Chair
Arizonans for Responsible Lending

~~

PS:  If you’d like to send Gov. Brewer a hand-written note expressing your views on this important matter, the address is:

The Honorable Jan Brewer
Governor of Arizona
1700 West Washington
Phoenix, Arizona 85007

~~~~~

Paid for by Arizonans for Responsible Lending

www.NoMoreLoanSharks.com

The A.P. reports:

Arizona Daily Star Sunday Editorial:

Our view: Brewer, legislators must take firm stand, reject industry’s bid to stay alive

Arizona voters last year rejected — by a 60-40 margin — an industry-crafted proposal to repeal the law that prohibits them from remaining in business beyond June 30, 2010, when the state law that allows payday loans expires.

By Howard Fischer, in the Yuma Sun:

PHOENIX — Unwilling to go away without a fight, the state’s payday lenders are trying to convince lawmakers to let them stay in business despite a public vote to the contrary.

And they’re hiring some big guns to do that.

The industry has retained the services of former state Attorney General Grant Woods. He told Capitol Media Services that after studying a proposal for a new lease on life by lenders, he’s convinced there is a role for payday lenders.

The lenders have hired Highground, whose owners include Chuck Coughlin and Doug Cole, both confidants of and advisers to Gov. Jan Brewer.

They have their work cut out for them.

By a 3-2 margin last year, Arizona voters rejected an industry-crafted proposal to repeal the law that prohibits them from remaining in business beyond June 30, 2010. That defeat occurred despite the industry pouring more than $14.7 million into the campaign; foes had less than $1 million.

Arizona’s usury laws cap interest on consumer loans at 36 percent a year.

But industry lobbyists pushed through a special law in 2000 allowing them to charge fees that far exceed the cap for what are called “deferred presentment transactions” of up to $500.

In essence, someone who needs money writes out a check for that amount plus the fee, which can be up to $17.85 per $100 valued. The company agrees not to cash the check for up to two weeks.

That computes out to an annual percentage interest of more than 450 percent.

But when lawmakers enacted that 2000 statute, they wanted to see how the new loans would work. So they included a “sunset” clause: The law self-destructs July 1, 2010 unless renewed.

Efforts by industry lobbyists to convince lawmakers to remove the sunset failed, even when the industry offered concessions like preventing “rollovers” to prevent that original $500 two-week loan from being refinanced time after time, with ever-increasing fees. That led to the failed ballot measure.

Woods said he never thought much of payday lenders before being asked to help build support for keeping them around. Woods said, though, the lenders have agreed to a series of reforms that make him comfortable working on their behalf.

But state Sen. Debbie McCune Davis, D-Phoenix, said much of what they are offering now was in the industry’s 2008 measure, the one voters found unacceptable.

For example, the plan would cap fees at $15 for every $100 borrowed instead of the $17.85. McCune Davis said that lowers the annual percentage rate to only 391 percent.

Woods said that interest figure, while technically accurate, is misleading.

“These are two-week loans, not annual loans,” he said, with about 94 percent of borrowers paying off within that time frame.

More to the point, Woods said no one would provide a two-week unsecured loan at the 36 percent annual limit since that would generate just a few dollars’ to cover costs and profit.

Woods said the plan to be presented to lawmakers also would allow a borrower who cannot repay within the two-week period an extra 60 days without interest.

“I don’t know any industry, any business, any bank, anybody who will give you 60 days, no fee, no interest,” he said.

But that, too, was in the industry-financed initiative voters rejected. And McCune Davis said so were other reforms Woods is touting as improvements, including the prohibition on rollover of existing loans and a method of ensuring that borrowers at one payday lender don’t already have outstanding loans from another.

Woods said the fact that so many consumers use payday loans shows there is a need for short-term loans for people who have expenses but have no collateral. The alternative, he said, is bouncing checks, “title” loans secured by someone’s vehicle, pawn shops or possibly loan sharks.

McCune Davis said Arizonans did just fine before payday loans were legal and will do so again if they go away.

She said there were lenders who loaned money under the old 36 percent interest cap but were driven out of business when payday lenders arrived. McCune Davis said they will come back.  And for those who can’t qualify, McCune Davis suggested relatives, friends and charities.

That presumes the lenders will go away.

Payday loans are illegal in Pennsylvania. But a company called SameDayPayday has set up shop in more than three dozen communities where it advertises that it can connect Pennsylvanians with out-of-state lenders who will wire the money to borrowers’ checking accounts within an hour.

Other states that ban payday loans, though, have enacted separate laws also making Internet-based transactions illegal.

The Arizona lenders face one other hurdle: time.

Any measure approved during the regular legislative session does not take effect until 90 days after the end of that session. With lawmakers at the Capitol until May — if not beyond — legislation reauthorizing the right of payday lenders to operate would not take effect until months after they were forced to shut down.

That leaves two options: Get the necessary two-thirds vote for an emergency, which could prove difficult given the recent public vote, or convince Gov. Jan Brewer to call a special session to deal with the issue.

Calls to Brewer’s office asking her feelings about the industry — and how she voted on the 2008 ballot measure — were not returned.

To add your comments, click here.

Today’s Arizona Daily Star Front Page:

Unwilling to go away without a fight, the state’s payday lenders are trying to persuade lawmakers to let them stay in business despite a public vote to the contrary.