Bill would add new rules, community payout

In today’s Arizona Republic:

There is a revived legislative effort to keep the high-interest lending industry alive in Arizona, but this version includes a payout to community groups.

Sen. Russell Pearce, R-Mesa, has proposed a strike-everything amendment to House Bill 2370 that would, among other things, allow fees of $15 per $100 borrowed, restrict the number of loans an individual could take out at one time and allow a customer to rescind the transaction if he or she returns the money within two business days.

It also would require businesses to give at least 1.5 percent of the fees it collects to “organizations that provide services to low-income and moderate-income individuals” in their community.

Payday-loan centers arrived in Arizona a decade ago after the Legislature approved a 10-year exemption to the state’s 36 percent cap on interest rates. If it’s not extended, that exemption expires June 30.

In 2008, the industry asked Arizona voters to make the 10-year interest-rate-limit exemption permanent. Voters said no.

Pearce’s is the second attempt this session to propose a bill that would preserve the industry.

Rep. Andy Tobin, R-Paulden, proposed House Bill 2161, which would have done the same thing Pearce’s amendment proposes to do – without the payout to community groups. Opponents packed the House Banking and Insurance Committee hearing room to speak against the bill, and Tobin pulled it off the agenda.

“There is not enough support yet,” Tobin said at the time.

Those who showed up in opposition at the last hearing said they intended to make sure there would never be enough support. Many are expected to return to oppose Pearce’s striker.

“All they’ve done is recycled (HB 2161) and added a bribe on top of it,” David Higuera, with Arizonans for Responsible Lending, said. “It’s a perverse argument to say we’re going to take millions out of the community and then give back a small portion of it as compensation.”

The amendment will be heard in the Senate Appropriations Committee Pearce chairs at 1:30 p.m. Tuesday in Senate Hearing Room 109, 1700 W. Washington St., Phoenix.

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