OUR VIEW: Payday-loan industry didn’t get reprieve from Legislature; residents win

Let us all be of good cheer: The Legislature has adjourned and, for the time being at least, can do no more harm.

There was very little cheering news from this legislative session, but there’s one very important item on the list to celebrate. That’s the end of usurious payday lenders in Arizona.

Lawmakers resisted several efforts to preserve the industry, so the special law that allowed them to operate will expire automatically on June 30. We wanted to wait until legislators officially adjourned and dispersed before celebrating.

A decade ago the Legislature voted to give the industry an exemption from the state’s 36 percent interest-rate cap – known as the “usury” cap – on a trial basis.

Thus the payday lenders were able to charge fees that tally to more than 400 percent on an annual basis – trapping many borrowers in an endless cycle of growing debt. There are 650 payday-lending shops around the state.

In 2008, Arizona voters rejected the industry’s effort to extend the exemption, despite a $14 million campaign by the payday lenders. The vote was 3-2 against the extension.

How did the Legislature come down on the right side of this issue this time? Capitol Media Services’ Howard Fischer reported in the Star that lawmakers were unwilling to buck the voters.

For instance, state Sen. Ron Gould, R-Lake Havasu City, told Fischer he believes business should operate with minimal government regulation, but he said the vote on the payday lending issue trumped that belief.

Sen. Debbie McCune Davis, D-Phoenix, a fierce opponent of the industry, has argued that once the 36 percent cap is restored for all lenders, credit unions and banks will step up to fill the need for quick, short-term loans, as they did before payday lenders got their exemption.

McCune Davis argued that the industry can operate successfully under the 36 percent “usury” cap. In fact, its lobbyist, Lee Miller, told Fischer last month that some payday-lending stores will be able to stay in business, making money on check cashing, and operating as agents for the Motor Vehicle Division.

A lot of bad laws were passed by this GOP-dominated Legislature. The list includes requiring local officers to enforce federal immigration law, ending training and certification for carrying a concealed weapon, allowing motorcyclists in Maricopa County to ride between lanes, restricting public funds to pay for abortion and adding new abortion reporting requirements – it’s a long list and not remotely cheering, so we’ll stop.

But let’s take a moment to be glad that payday lending and the dreadful human toll it takes will end in Arizona in eight short weeks. Not a day too soon. At least they got this one right.

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