Daily Star Editorial:

Lawmaker’s attempt to keep industry alive has no place in Arizona –

Note to Gov. Jan Brewer and members of the Arizona Legislature: The people have rejected a continuation of the payday-loan industry by a margin of 60-40. Any effort to hornswoggle the voters with an end run around their wishes would be corrupt.

Despite the voters’ 2008 expressed will, House Majority Whip Andy Tobin, R-Paulden, is sponsoring HB 2161, which would keep payday lending alive in Arizona beyond June 30, when the state law that allows the usurious industry to operate will expire.

We are pleased to report that the Legislature’s Web site showed as of Monday morning that Tobin has so far been unable to recruit a single co-sponsor for the bill. But some Republicans have defended the bill, and the payday-loan industry has hired powerful lobbyists with connections to Brewer.

The good news is that Tobin needs a two-thirds vote of both houses in order for the law to take effect by June 30, the day payday lending sunsets.  That’s a steep challenge.

[NOTE: The bill includes language that would make it take effect RETROACTIVELY to BEFORE its official "effective date."  In other words, the payday lenders DO NOT NEED two-thirds majority votes to get their way!  A simple majority vote in both houses would allow payday lenders to continue unabated.]

Still, it’s vital that lawmakers who oppose the bill be vigilant to assure that it doesn’t get onto the governor’s desk through some form of legislative sleight of hand, such as a strike-everything amendment to a different bill.

Tobin told Capitol Media Services that he wants to help the 3,000 people who work in the industry keep their jobs. He also said there is an apparent need for the short-term, high-interest loans, and the state should not restrict consumers’ access to such loans.

Fiddlesticks.

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 grow to be so burdensome that it becomes almost impossible to repay a loan.

Payday lenders do precisely that.

That’s why Rep. Frank Antenori, R-Tucson, opposes allowing the industry to continue.

“I saw what they did to my soldiers when I was in the military,” he told Capitol Media Services. “They relentlessly get you into a cycle of having to come in, renew your loans, pay the fees. It buries people.”

Tobin argues that HB 2161 is considerably different from the measure voters rejected in 2008 that would have allowed the industry to continue.

In fact, according to Capitol Media Services, HB 2161 is substantially the same as the ballot measure.

Both allow lenders to charge up to $15 for every $100 borrowed, which translates to an effective annual interest rate of about 390 percent.

Both would repeal a law that allows unpaid loans to be “rolled over” up to three times for extra fees, and both would ban lenders from charging borrowers more than twice for the same bounced check.

Under both, if a borrower can’t pay up at the end of loan, he’d be given a payment plan, interest-free, to pay it off.

Among the differences from the ballot measure, the bill would require lenders to use a “commercially reasonable method” to make sure a loan applicant doesn’t have outstanding loans elsewhere. It also would give borrowers up to two business days to back out of a loan at no cost.

In 2000, payday-loan industry lobbyists pushed through the special law that allows them to charge fees far higher than the state’s 36 percent cap for transactions of up to $500.

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 rate of more than 450 percent.

Antenori said that instead of allowing the payday-loan industry to continue, he would “rather find a way to work with banks and credit unions to find a way to provide high-risk, short-term loans with a reasonable interest rate,” under 40 percent a year.

State Sen. Debbie McCune Davis, D-Phoenix, has said lenders that were driven out of business by the payday-loan industry used to finance loans under the 36 percent interest cap; she predicts they will return to Arizona when payday lenders leave.

The bottom line is that those who have a short-term need for cash risk being dragged into financial ruin when they turn for “help” to usurious lenders. The voters are clear: They want it to stop.

CONTACT YOUR LEGISLATORS

• Keep in touch with lawmakers through the Web sites www.azhouse.gov and www.azsenate.gov

• Call the Tucson legislative office at 398-6000.

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