Sierra Vista Herald Editorial:

Payday lenders are cranking up a new initiative in the state Legislature to usurp what voters mandated in 2008.

That is, that the state will allow lenders to charge a maximum interest rate of “only” 36 percent to anyone who wishes to take out a loan.

Payday loan businesses routinely charge 390-460 percent to their customers. Prior to 2000, loans with annual interest rates of more than 36 percent were illegal in Arizona. But, that year, industry lobbyists convinced lawmakers to approve what are technically called “deferred presentment transactions” that circumvented the limit. At the time, the Legislature put a time limit on the allowance of these types loans.

That was basically what the referendum was all about — allow the continued gouging of the everyday citizen or revert to the pre-2000 limit.

Despite the industry tossing millions into a publicity campaign to allow continuance of these types of loans, Arizonans voted by a 3-2 margin to put an end to these high interest rates.

Citing the jobs the industry provides in the state, House Majority Whip Rep. Andy Tobin, R-Paulden, plans to introduce a bill that would negate the voters’ decision. Of course, job losses are a sensitive political issue in a state that has had so many unemployed due to the economy.

But that is just a smoke screen.

The jobs may or may not disappear if the rate is lowered. In fact, even though the proposed new rate is still high at 36 percent, the industry might even grow, since more people might consider paying that interest rate rather than one that is nearly 10 times greater.

In any case, we urge you to contact your representatives and tell them to pull the plug on this idea.

The Arizonans for Responsible Lending are behind the efforts to make sure this law does not get passed. We agree and love its slogan: “The voters have spoken: The Sun Must Set on 400%!

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© 2009 The Sierra Vista Herald
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