Payday lenders trying end run around voters
Arizona Daily Star Sunday Editorial:
Our view: Brewer, legislators must take firm stand, reject industry’s bid to stay alive
Given Arizona’s history with payday loans and voters’ desire to run predatory lenders out of the state, it would be shameful if the Legislature and Gov. Jan Brewer choose to give payday lenders a new lease on life. They must not do so.
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.
The state’s usury laws, which limit interest on consumer loans to 36 percent a year, were created for a reason — to keep unscrupulous lenders from victimizing unsophisticated borrowers who don’t understand that high interest rates can become so burdensome that it becomes almost impossible to repay a loan.
Payday lenders have retained former Arizona Attorney General Grant Woods and the Phoenix lobbyist firm Highground to persuade lawmakers and Brewer to let them stay in business, Howard Fischer of Capitol Media Services reported on Friday. Highground’s owners include Chuck Coughlin and Doug Cole, both advisers to Brewer, Fischer noted.
Thus, a person who needs money for a few weeks can write a check to a payday lender for that amount plus the fee, which can be up to $17.85 per $100 borrowed. The lender agrees not to cash the check for up to two weeks. The borrower pays an annual percentage interest of more than 450 percent.
Woods told Fischer that the payday lenders agreed to changes that made him comfortable working on their behalf.
But state Sen. Debbie McCune Davis, D-Phoenix, told Fischer that much of what they are offering now was also in the 2008 measure rejected by voters.
Woods said that interest figure is accurate, but misleading. “These are two-week loans, not annual loans,” he told Fischer. He said that about 94 percent of borrowers pay off the loan within that time.
The plan to be presented to lawmakers would allow a borrower who cannot repay within two weeks an extra 60 days without interest, Woods said. That provision also was in the measure voters turned down.
So are other “improvements” Woods cited, including a prohibition on rolling over existing loans and a method to ensure that borrowers at one payday lender don’t have outstanding loans from another, according to McCune Davis.
Woods asserted that payday loans are needed, and cited the fact that people turn to them as evidence of this.
But the voters have made themselves clear. When money is tight, consumers don’t just need credit options, they need good credit options.
The Legislature and Brewer must take heed. Case closed.
December 2nd, 2009 at 10:58 am
[...] Payday lenders trying end run around voters – Arizona Daily Star Editorial 11/29/09 [...]