Friends,

Today is another great day for Arizona!

The House Commerce Committee refused to hear HB2550, because high-cost lenders are not welcome in this state.

Committee Chairman Jim Weiers, the bill’s author, held the bill from consideration because of the clear lack of support. The committee meeting just adjourned.

This is a great victory, and it’s because of YOU! The committee members reported they received floods of emails and phone calls asking them to vote NO. This bill had no chance of passing today because of your civic engagement.  THANK YOU.

Here are some of the organizations and individuals that registered their opposition to HB2550 in the hearing today:

AARP Arizona, Arizona Consumers Council, Southwest Center for Economic Integrity, Society of St. Vincent de Paul, William E Morris Institute for Justice, SEIU Arizona, Arizona Coalition Against Domestic Violence, Children’s Action Alliance, Christina Plante, Virginia Brant, and Mary Murphy, state president of the All Arizona School Retirees Association (AASRA).

Additionally, many of you wrote your legislators directly. One constituent put it very clearly:

“As a conservative voter (and registered Republican), these types of businesses that target lower income people really irk me… Triple digit interest is loan sharking, plain and simple…

[And] now the people have spoken, and let the payday loans clause expire.  This is really the issue: will you go against what the people of Arizona have clearly stated they want?”

Thank you all for speaking up!

This victory would not have been possible without you. And, we couldn’t have done it without the legislators who know that Arizonans deserve better.

We thank those members of the House Commerce Committee who were prepared to vote ‘No’ on this predatory lending bill today.

While we’ve won the day, we don’t believe we have heard the last of this bill, so stay tuned for updates, and thanks for staying involved!

All our best,

Arizonans for Responsible Lending

Dear Supporters,

Your calls to Legislators against HB2550 are working!  Keep them up!

We are hearing great reports from the field and have gotten a couple of commitments from Commerce Committee members to vote NO!

The bill, HB2550: “Small Installment Loans,” will be heard in the House Commerce Committee TOMORROW MORNING, February 16th. (Mtg starts at 9:00am)

Please focus your calls this afternoon on the 5 members of the committee that need to hear from you most! (see below)

It will take you only about 5 minutes to make the five calls. But those five minutes could be huge for our ability to stop this predatory lending bill now. Please pick up the phone.

Thank you for taking action today!

David
Arizonans for Responsible Lending

~~~

Here’s why we should stop HB 2550:

• HB 2550 will legalize triple-digit APR interest rates to Arizona consumers for small consumer installment loans, exempting a new industry from the state’s 36% usury cap on consumer loans.

• HB 2550 ignores the voters’ mandate. When Arizona voters went to the polls in November 2008, they clearly said No, by a 60%-40% margin, to triple digit interest rates, special deals under the state’s usury caps, and fake “reforms” in the industry-sponsored Proposition 200.   HB 2550 ignores the voters’ mandate by legalizing another form of high cost consumer lending that will inevitably lead to long-term debt.

• Arizona has rejected these schemes for years! HB 2550 is the same fee structure as bills that were rejected in 2009 and 2008. Voters and the legislature repeatedly rejected triple-digit interest loans that generate piles of fees for the lender and long-term debt for the borrower.

• Arizona consumers cannot afford to replace one predatory loan product with another.  We fought for 10 years to finally rid the state of payday loans.  The voters don’t want new triple-digit loan products on the market. Our state already has consumer lenders offering small installment loans in AZ at the current 36% rate cap or less.

• NO MORE EXCEPTIONS TO THE CONSUMER LOAN ACT!

Contact these members of the

House Commerce Committee TODAY!

Tell them to Vote NO on HB2550!

Tell committee members to respect the voters’ will and reject triple-digit interest rate lending in Arizona.

Language of HB 2550: Click here

Commerce Committee Updates, including live video feed of the hearing on 2/16: Click here

Dear House Commerce Committee Member,

Please vote NO on HB2550 on your agenda tomorrow, for the reasons below.

Thank you,

Kelly Griffith

Southwest Center for Economic Integrity
(520) 250-4416
www.economicintegrity.org

Just like payday loans, HB 2550 would create a special carve-out for high-cost loans:

• Just like payday, the proposed fee structure incentivizes long-term, triple-digit interest rate debt. These loans are no different than payday loans, particularly when you consider the massive loan flipping.  Records from companies making these loans in other states show that 85% to 90% of profits for these loans come from refinancing loans to existing customers!

• HB 2550 hinders a sustainable financial market: Once in the market, just like payday lenders, all of these lenders charge the exact same rate – the highest allowable. In the words of Andrew Morrison, CEO of Sun Loans/Brundage Management, “The ceilings in fact become floors and everyone charges the exact same rates.”

HB 2550 would replace one predatory product with another:

• HB 2550 would legalize triple-digit APR interest rates to Arizona consumers for small consumer installment loans, exempting a new industry from the state’s 36% usury cap on consumer loans (A.R.S. 6-632 – Finance charges).

• HB 2550 ignores the voters’ mandate. When Arizona voters went to the polls in November 2008, they clearly said NO, by a 60%-40% margin, to triple-digit interest rates, special exemptions from the state’s usury cap, and fake “reforms” in the industry-sponsored Proposition 200.  HB 2550 would ignore the voters’ mandate by legalizing another form of high-cost consumer lending – under another exemption from the Consumer Loan Act – that inevitably would lead to long-term debt for borrowers.

• Arizona consumers cannot afford to replace one predatory loan product with another.  Our state – and others – already has consumer lenders serving this market, offering small installment loans at the current 36% rate cap or less. In addition, charity and relief societies, friends and families, existing AZ financial institutions and credit unions that offer small unsecured loans under the terms of the existing rate cap already exist in Arizona.

Voters don’t want triple-digit interest rates allowed in Arizona:

• Voters clearly stated that the 36% cap should apply to all lenders. No more special deals!  The carve-out in HB 2550 would allow certain lenders to play by their own rules, giving them a government-regulated, government-endorsed, competitive advantage over other consumer lenders in the market.

• HB 2550’s schemes have been rejected many times: HB 2550 is the same fee structure as HB 2061 and HB 2071, both of which never even made it out of committee in 2009.  It’s the same as HB 2672 from 2008, which also was rejected.  Just as they did with payday loans, voters and the legislature repeatedly rejected triple-digit interest loans that generate piles of fees for the lender and long-term debt for the borrower.

Prop 200, the Payday Loan Reform Act (2008):

• Prop 200, placed on the ballot and financed with nearly $15 million by the payday loan industry in 2008, would have continued triple-digit interest loans in Arizona by extending the industry’s exemption from the Consumer Loan Act. In 29 of 30 legislative districts, every congressional district, and every county across the state, their proposal was rejected.
  

Voters agreed: No more special deals for predatory lenders!



Prop 200 Results by Legislative District (2008):

How the Fees Work in HB 2550:

HB 2550 would authorize acquisition fees and monthly handling fees using a complicated pricing structure.  The acquisition fee, 10% of the loan up to $75 dollars, is paid off within the first 90 days of the loan, but can be charged up front each time the loan is renewed.

HB 2550 would allow lenders to renew, or flip, loans up to three times per year.  There is no limit on the number of total renewals per loan. The lender does not have to wait until the end of the loan term to renew the loan and the lender may chose to renew the loan for an amount higher than the original loan.

Dear Supporters,

We must marshal all resources to come out strongly against a predatory consumer lending bill, HB2550, right now.

The bill, called “Small Installment Loans,” will be heard in the House Commerce Committee this Wednesday, February 16th, at 9:00AM.

Here’s why we should stop HB 2550–NOW:

• HB 2550 will legalize triple-digit APR interest rates to Arizona consumers for small consumer installment loans, exempting a new industry from the state’s 36% usury cap on consumer loans.

• HB 2550 ignores the voters’ mandate. When Arizona voters went to the polls in November 2008, they clearly said No, by a 60%-40% margin, to triple digit interest rates, special deals under the state’s usury caps, and fake “reforms” in the industry-sponsored Proposition 200.   HB 2550 ignores the voters’ mandate by legalizing another form of high cost consumer lending that will inevitably lead to long-term debt.

• Arizona has rejected these schemes for years! HB 2550 is the same fee structure as bills that were rejected in 2009 and 2008. Voters and the legislature repeatedly rejected triple-digit interest loans that generate piles of fees for the lender and long-term debt for the borrower.

• Arizona consumers cannot afford to replace one predatory loan product with another.  We fought for 10 years to finally rid the state of payday loans.  The voters don’t want new triple-digit loan products on the market. Our state already has consumer lenders offering small installment loans in AZ at the current 36% rate cap or less.

• NO MORE EXCEPTIONS TO THE CONSUMER LOAN ACT!

Contact the members of the

House Commerce Committee TODAY!

Tell them to Vote NO on HB2550!

Tell committee members to respect the voters’ will and reject triple-digit interest rate lending in Arizona.

Language of HB 2550: Click here

Commerce Committee Updates, including video: Click here

Thank you for taking action,

Arizonans for Responsible Lending

Former House Speaker Jim Weiers clearly doesn’t trust the voters:

Capitol Media Services reports:

Saying the demise of payday lending left a gap, a veteran legislator is proposing a new kind of consumer loan, one with higher interest rates than now allowed.

Rep. Jim Weiers, R-Phoenix, said the 2008 decision by voters to kill payday lending in Arizona left a “huge void” in the market, particularly for people whose credit history does not give them access to more traditional sources of borrowing. What’s left, he said, is pawning items and turning to unregulated and illegal loan sharks.

What Weiers proposes in House Bill 2550 is new rules for loans of $200 to $3,000. Interest rates would be on a sliding scale, from 4 percent a month for the first $750 up to 1 percent for anything between $2,250 and $3,000.

On top of that, lenders could charge an acquisition fee of up to 10 percent of the loan or $75, whichever was less.

Rep. Debbie McCune Davis, D-Phoenix, said Weirs’ proposal is little better than the high-interest, short-term loans that voters rejected.

“The bill is just one more form of predatory lending,” she said. “The sponsor of the bill seems to have missed the election in 2008 when the voters said ‘no’ to triple-digit interest rates.”

Arizona law generally caps interest on loans at an annual rate of 36 percent.

In 2000, though, legislators agreed to create an exception for “deferred presentment transactions.”

A borrower would write out a check that the lender would agree not to cash for up to two weeks in exchange for a fee of $17.85 for each $100 borrowed.

That translated out to an annual percentage rate of more than 400 percent.

That 2000 law, however, provided for only a 10-year experiment. Lawmakers refused to extend the law, and a heavily financed initiative by the payday-lending industry also fell short.

The lenders shuttered last June 30.

Weiers said that left a gap.

“If you have a car that needs $600 in repairs and you don’t have the $600, then you go down and get a rental car for $19 a day,” he said.

“At the end of the day . . . you still don’t have a car, and you still have to get the car fixed.”

Weiers said banks aren’t providing those small loans because they are not secured by collateral.

At the same time, he said, it’s harder to get credit cards. And those who have cards are finding their borrowing limits reduced.

Under Weiers’ proposal, the loans could be renewed up to three times. And companies that gave these loans could not provide more than one loan at a time to any borrower.

Weiers said those kind of limits should preclude the kind of abuse and financial problems created by payday lending, in which individuals got stuck in a cycle of debt, taking out one loan to pay off another.

McCune Davis is not convinced.

“These companies train their people to roll the loans over before they’re paid off,” she said. “They literally move the balance forward into a new loan so the consumers pay that interest over and over again. That’s part of the problem.”

She also rejected Weiers’ contention that people who don’t have bank accounts, good credit or credit cards need options like this. McCune Davis said there already is one: joining a credit union, which has to abide by the current interest rate caps.

“If you have a relationship with a credit union and you need a short-term loan, your odds of getting it are better that you would get a loan you can actually pay off and end up in a financially secure position rather than wind up deeper in debt,” she said.

The legislation likely will get a hearing because it’s assigned to the House Commerce Committee, which Weiers chairs.

To add your comments: http://www.azcentral.com/business/abg/articles/2011/02/10/20110210abg-loans0210.html#ixzz1Dbm8xWIP