By Mary K. Reinhart
The Arizona Guardian

House Majority Whip Andy Tobin pulled his payday loan bill from a key committee Monday, saying the controversial measure needs Democratic votes to survive.

Tobin, the bill’s lone sponsor, said several Democrats withdrew their support for HB 2161 and he can’t get it through with just Republicans.

“This is not an easy bill to support,” Tobin conceded. “This has to be a bipartisan bill.”

It’s nearly identical to a ballot measure that voters overwhelmingly rejected in 2008, despite the payday loan industry spending nearly $15 million to push it. Without Tobin’s bill, an exemption in the law that enables higher interest rates will expire and payday lenders will be banned July 1.

Tobin said there are key differences in the bill, however, that will further regulate the high-interest short-term loans and protect consumers from “bad actors.”

“This is an industry that’s behaved badly,” he said. “They need to be regulated.”

Payday lenders can charge nearly 400 percent interest for two-week loans of up to $500. The bill, like the ballot measure, would prohibit consumers from rolling over loans and getting trapped in a cycle of debt. A new provision would allow borrows to back out of the loan within two days without penalty.

Tobin said the bill would “protect 3,000 jobs that we cannot afford to lose.” If the industry is banned, he said, borrowers will just find short-term loans online, at a higher rate and without the protections the Arizona law would offer.

Opponents, including the AARP and a host of religious and other nonprofit groups, say payday lenders prey on the poor, creating long-term debt at sky-high interest rates. The practice has been banned in 15 states and Washington, D.C.

Rep. Clovis Campbell, a Democrat whose district includes South Phoenix, had indicated he might be willing to support the bill. But when he withdrew his backing, and his vote on the House Banking and Insurance Committee, Tobin pulled the bill before the hearing.

Campbell told Capital Media Services that he would support the measure only with “substantial changes,” including  lowering the interest rate.

“My community has spoken to me,” Campbell said. “They don’t want it there.”

Payday lenders “haven’t been community friendly… outside of doing business and taking money from us,” he said.

Lobbyist Barry Aarons, who represents opponents of the bill, said Tobin was courageous to introduce the measure in the face of broad public opposition and was wise to yank it from committee.

“We are very pleased that we don’t have to go through that battle,” he said. “The voters have spoken. The changes that were made were cosmetic.”

Aarons said the measure is likely to pop up later in the session. Tobin said so, too.

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