In today’s Arizona Republic, by E. J. Montini:

In 2008, the payday-loan industry spent about $15 million trying to convince Arizona voters to allow it to continue soaking desperate borrowers with extravagant fees and interest rates.

And they failed. Sort of.

The industry still has plenty of money. And from their perspective, if the people won’t support you, why not go after the next best thing?

Politicians.

And why not start with the governor?

In November 2008, voters rejected Prop. 200, which would have allowed payday lenders to continue trapping desperate saps in a bottomless pit of debt without any regulation.

Now that the money train is at risk of going off the rail, the industry has hired former state Attorney General Grant Woods as well as the lobbying firm HighGround to save them.

Quietly and behind the scenes the hired guns are crafting legislation that would convince the governor and legislators to save the industry from restrictions that are scheduled to go into effect this summer.

Why would the industry expect that Woods and the HighGround folks to succeed?

Well, maybe it’s because Woods is the co-chairman of Gov. Jan Brewer’s gubernatorial campaign, while the top dogs at HighGround are expected to run Brewer’s election operation.  Woods doesn’t consider this a valid criticism.

“I think that is a cheap shot that they (the opposition) tried to pull on the governor. She has zero to do with this at the moment,” he told me.

Likewise, when the governor was asked if she was troubled by having big-money lobbyists working so close to her, Brewer said: “I don’t see any conflict.”

Really? Because if I were governor (God forbid), I might be a little concerned that the people closest to me are taking money from a special-interest group. Particularly one that had been soundly rejected by voters.

But hey, maybe I’m just the suspicious type.

“There is no way that she disassociates herself from the people behind this effort except by her actions,” said state Sen. Debbie McCune Davis, who spearheaded the opposition to the 2008 payday-loan proposition. “And so far, the governor has not done that.”

McCune Davis describes the situation as a fairly straightforward example of a powerful business interest trying to buy a result that it could not earn at the polls. The proposition was defeated by a 60-to-40 percent ratio, losing in every Arizona county.

Woods doesn’t see it that way. He said that the new legislation will include fee restrictions, reporting requirements and a computer database that will cap loans at $500 with none of the rollover possibilities that have trapped people in debt.

McCune Davis is skeptical that such legislation will be ironclad or that Arizona legislators will give it an honest hearing.

And she has a point. The industry didn’t exactly play fair during the past election, and legislators have spent the year operating behind closed doors on the state budget.

Critics also speak of how a payday loan, extrapolated over a year, could amount to nearly 400 percent interest. Woods rejects that, too.

“This is a two-week loan,” he said, adding that the industry is willing to cap fees at $15 per $100 borrowed.

Does 15 percent on a short-term loan sound excessive to you?

Look at it this way. If Gov. Brewer walked into a payday-loan store and borrowed enough to cover the state’s $1.6 billion deficit, she would have to be ready in two weeks to pay back the entire $1.6 billion, plus $240 million in interest.

Woods also argues (and you’ll hear politicians say this) that the industry provides loans for “working” people, as well as jobs and tax revenue that we can’t afford to lose.

On the other hand, there weren’t any payday loans in Arizona before 2000, and we seemed to do OK. And many of the biggest companies in the industry are headquartered out of state.

“I would expect and hope for full public hearings on this,” Woods said. “I think the more you talk about the facts, the more support we will get, because a reformed industry makes sense.”

So, does Woods believe the Legislature will pass a bill instituting “reforms” that allow the industry to continue and that Brewer will sign it?

“Yes,” he said.

I wouldn’t bet against him. From where he stands (right next to the governor), he’s in a position to know.

Reach Montini at 602-444-8978 or ed.montini@arizonarepublic.com

To add your comments to this column, click here.

Well, I wouldn’t believe it if I hadn’t seen it with my own eyes.

Gov. Brewer stated Monday that she doesn’t see it as a conflict of interest that her chief campaign advisers, including Campaign Co-Chair and former Attorney General Grant Woods, are receiving money from the payday lenders to try to keep them in business beyond July 1st of 2010 – despite an overwhelming public vote to the contrary.

VIDEO: www.youtube.com/watch?v=3RkM0_4kqNM or www.NoMoreLoanSharks.com

Transcript: click here (PDF)

The voters spoke out against payday lenders and their 400% interest rates quite clearly last November.

But apparently, Gov. Brewer is open to reversing the will of the voters, and she sees no problem with the fact that her central advisers are being paid — large sums, we hear — by those same payday lenders as their sunset date approaches!

CALL GOVERNOR BREWER –
Tell her to Respect the Will of the Voters.
The Sun Must Set on 400% Interest Rates!

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

The Governor’s Office keeps count of how many calls they receive for or against any given issue.  We must KEEP UP THE PRESSURE until Gov. Brewer publicly acknowledges that the voters have spoken and our verdict was clear!

After you’ve placed your call, forward this email to your friends and colleagues.  Ask them to call, too.

In Monday’s interview, Gov. Brewer states that her advisers “haven’t spoken to me about it” and that she doesn’t see “any conflict,” while going on to say — in the same interview — that it is her understanding that the payday lenders “are going to go in and they’re going to make some modifications” in order to win legislative approval to stay in business in Arizona.

These “modifications,” it turns out, are the same ones they tried to sell as “payday loan reform” back in 2008.  The voters weren’t buying it — 400% interest is still 400% interest!

Well, perhaps Gov. Brewer does not trust the 1,271,717 Arizona voters who rejected payday lenders last November – more than voted for John McCain for president in his home state.

Perhaps she needs to hear from YOU directly.  Today, tomorrow, and every day until she drops her ties to the payday lenders!

Take a minute and call Gov. Brewer right now:

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

~

This issue is beginning to get a lot of coverage in the press:

Arizona voters clear on payday loan businesses – Yuma Sun Editorial 12/2/09

Brewer: ‘no problem’ on backers’ payday loan work – AZ Capitol Times 12/2/09

Brewer allies back payday lenders – Arizona Republic 12/1/09

Brewer not opposed to legislation to save payday-loan industry – Capitol Media Services 12/1/09

Interesting bedfellows aligned on behalf of Payday loans – Seeing Red AZ 12/1/09

Payday Lending an Issue in the Next Republican Primary? – Rum, Romanism and Rebellion 12/1/09

Payday lenders trying end run around voters – Arizona Daily Star Editorial 11/29/09

The more we can keep up the pressure, the better our chances of defeating the payday lenders’ latest scheme and finally ending 400% interest rates in Arizona!

Tell Governor Brewer:

• 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.

Call Gov. Brewer immediately.  If you don’t get through, try again:

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

Yuma Sun Editorial 12/2/09:

Despite the fact that voters of Arizona spoke very clearly a year ago when they rejected a ballot issue that would have allowed so-called payday loan businesses to continue to operate in our state, Gov. Jan Brewer isn’t opposed to potentially reversing that vote.

That sends the wrong message to voters, and we hope she reconsiders her position.

Payday loan operations – which provide borrowers with short-term cash loans until their next payday at high interest rates – were authorized in an Arizona law which expires in June.

Voters rejected the idea of removing that expiration date – even with consumer protection concessions from the industry – thus closing down these loan operations in Arizona.

We supported the idea of allowing payday loans to continue at the time of the vote, although we did feel measures needed to be put in place to limit interest rates and to protect consumers from abuse.

Some consumers do find the short-term loans useful and are willing to pay the huge interest rates charged for them. While that is an unwise decision in our view, we argued borrowers should have the right to make their own decision.

Obviously, a majority of voters – who rejected the payday loans by a 3-to-2 margin – disagreed with our viewpoint.

We got the message the voters sent but perhaps the governor and lawmakers missed it.

Proposed legislation is being drafted that would nullify the will of the voters.

The payday industry is making another push to remain in business, with the help of some close political advisers to the governor who are connected with the lending industry, a clear conflict for the governor when it comes to this issue.

We agree with the governor that the Legislature has the right to consider any matter it chooses, but reversing the will of the voters is nearly always a very bad idea since it undermines their confidence in the system.

This instance is no exception to that rule.

To view this article on the Yuma Sun website, click here.

AP Report, in the Arizona Capitol Times:

A critic says Gov. Jan Brewer’s credibility is being undermined. But the governor says it’s not inappropriate that some of her political associates are doing work for the payday loan industry that could result in legislation reaching her desk.

The industry-hired associates include Chuck Coughlin, a lobbyist and political consultant who is managing Brewer’s 2010 campaign, and Grant Woods, a former attorney general and her campaign’s co-chairman. Both have been hired by the payday loan industry to try to keep it authorized under state law past July 1, when the current authorization is set to expire.

Arizona voters in November 2008 rejected an industry-backed initiative to extend the authorization for the high-interest, short-term loans.  It also would have prohibited a lender from making a new loan to a customer who already has a loan outstanding and required lenders to allow repayment plans on request before a transaction is due.

Reauthorization is expected to be a contentious issue during the 2010 regular session, which starts in January.

An industry critic, Democratic Sen. Debbie McCune Davis of Phoenix, said Nov. 30 the Brewer associates’ dual roles undermine the Republican governor’s credibility.

“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,” McCune Davis said.

Asked about the dual roles of some of her political associates, Brewer said she didn’t “see a problem with it” and that they haven’t talked to her about the reauthorization issue.

“We will do what’s right for the people of Arizona,” she said.

Brewer also said it was premature to comment on whether she’d support reauthorization.

Coughlin declined to comment.  Woods did not immediately return a call for comment.

Supporters of payday loans say they serve customers who otherwise couldn’t get credit. Opponents say the loans can lead to perpetual debt traps for inexperienced borrowers.

To see the article at AzCapitolTimes.com, and post your comment, click here.

Arizona Republic, Valley & State Front Page:

Some of Republican Gov. Jan Brewer’s closest political allies have joined the state’s payday lenders in a last-ditch push to help the industry with legislation it needs to survive past 2010.

Leading the effort for the lenders is former Arizona Attorney General Grant Woods, who is co-chairman for Brewer’s 2010 gubernatorial campaign, as well as Phoenix-based HighGround, a lobbying firm is headed by Chuck Coughlin and Doug Cole, close allies of Brewer who are expected to manage her campaign for a full, four-year term.

Without an extension, Arizona’s hundreds of payday-loan operators will have to close their doors July 1. That’s because legislation that in 2000 enabled the sort of short-term cash advances provided by payday lenders included a 2010 “sunset” date.

It was just last year that the industry wrote and financed a ballot initiative to reform payday lending practices in Arizona while eliminating the expiration date.

But despite sinking nearly $15 million into the campaign, outspending opponents by nearly 15 to 1, the initiative was handily rejected by voters. The proposal failed in all 15 Arizona counties, with 60 percent of the state electorate voting in opposition.

“The public pretty substantially said not just ‘no,’ but ‘heck no,’ ” said Republican political consultant Barry Aarons, who helped lead the opposition campaign to the payday initiative.

Given that public stance, the alliance between Brewer confidants and the payday lenders in a year in which the governor will be on the ballot has raised eyebrows among political observers.

Pollster Fred Solop said Brewer needs to distance herself from the lenders and their new legislative push, something she declined to do Monday.

“I don’t see any conflict,” Brewer said when asked about the relationship between her political allies and the payday lenders.

Brewer insists she has given little thought to payday lenders, to the point that she said she doesn’t remember how she voted on last year’s initiative.

Regardless, Solop, chairman of Northern Arizona University’s politics and international-affairs department, said Brewer risks appearing as though she has aligned herself with unpopular interests and contrary to the will of voters.

“She should come out publicly and endorse the vote of the people,” Solop said. “She really needs to send a clear message.”

Payday loans have become a political football in recent years, labeled predatory by critics but defended by advocates who say the loans remain a good option for people facing a short-term cash crunch. Under the existing system, an individual needs only a checking account and steady job to obtain a cash advance. The borrower agrees to repay the loan plus a fee after the next payday.

Woods, who says he voted against last year’s payday initiative, said the legislation now being drafted goes a long way toward addressing concerns that he and other critics have had with the industry, while ensuring it remains in operation past July 1. Key provisions would:

• Cap fees at $15 per $100 borrowed, compared with the current limit of $17.65 per $100. With fees, that works out to an annual percentage rate of interest on a two-week loan of 391 percent, down from the current APR that can reach as high as 460 percent.
• Prevent loan extensions, the so-called rollovers that have buried some borrowers in additional fees.
• Create a database to track borrowers and ensure that none exceeds a cumulative $500 limit on payday loans.

Similar provisions were included in the failed ballot initiative, though Woods said the new legislation is more comprehensive. Additionally, he said, the meltdown of the banking industry in recent months makes payday loans more needed than ever.

Woods also noted the more than 5,000 jobs and roughly $80 million in annual state tax revenue provided by Arizona’s payday lenders. Allowing the industry to expire now would only add to the economic downturn, he said.

State Sen. Debbie McCune Davis, a longtime industry foe, called payday loans “debt traps.” The Phoenix Democrat cautioned against any elected official bucking the more than 1.2 million Arizonans who voted against the industry in 2008.

“That’s more votes than John McCain got for president in his home state,” McCune Davis said. “The voters have clearly indicated they want the sunset to take effect.”

To add your comments, click here.

From Capitol Media Services 12/1/09: