No More Loan Sharks, A Project of Arizonans for Responsible Lending

Brewer opponents blast payday loans

From Capitol Media Services, in today’s Daily Star:

PHOENIX — Announced and potential opponents of Gov. Jan Brewer are criticizing her connection to efforts to keep the payday loan industry alive.

Both Vernon Parker and John Munger, Republicans seeking to oust Brewer in the primary, said there is no reason the industry should be able to make short-term loans at triple-digit interest rates.

Maricopa County Sheriff Joe Arpaio, another possible Republican contender, questioned why Brewer and lawmakers would even consider the issue in light of last year’s defeat on an industry sponsored initiative to let them stay in business.

“If you’re elected, I’ve got a strange theory that maybe you should do what the voters want,” he said. “They’re your bosses.”

State Treasurer Dean Martin, also a potential GOP candidate for governor, is willing to allow for continued payday lending in Arizona, assuming there can be certain reforms of how the industry operates.

“But I don’t think it’s an issue the Legislature needs to be addressing right now,” he said. “We’ve got bigger issues with the (state) budget.”

The stances of the declared and would-be candidates come on the heels of the industry’s efforts to build support for the repeal of a provision in law that eliminates their right to operate after June 30.

Of note is who the lenders have hired to pave the way.

One contract went to Highground, a political consulting and lobbying firm. That also is the firm handling Brewer’s election bid.

The lenders also have retained Republican former Attorney General Grant Woods to try to build community support in the face of last year’s 3-2 vote against payday lenders. Woods is a co-chair of Brewer’s election campaign.

Munger said his stance against the payday-lending industry is unrelated to his gubernatorial bid.

Munger said state laws should preclude companies from being able to charge the kind of fees involved here.

State law generally limits annual interest rates to no more than 36 percent. But a special law approved in 2000 at the behest of lenders lets them charge fees of up to $17.85 for each $100 borrowed for up to two weeks, a rate that translates to more than 400 percent on an annual basis.

“There are certain things in our society that we regulate because they don’t satisfy our sense of moral standards,” Munger said.

“That includes activities which take advantage of the most vulnerable in our society,” he continued. “In my opinion, this amounts to loan-sharking.”

Woods said the industry is needed because it is the only option for some people who lack credit but need money quickly for emergencies.

But Parker asked, “Where did they get the money before 2000? People survived before we had this predatory lending practice.”

Munger said short-term loans become a financial crutch for the poor.

“We’re condoning bad decision making and bad financial behavior,” Munger said.

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