As Robert Merry notes in his book “A Country of Vast Designs,” President Andrew Jackson wrote in an 1832 veto letter, “In the full enjoyment of … the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions … and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society… have a right to complaining of the injustice of their Government.”

So it is with H2161, the attempt to reverse the public vote of 2008 and provide artificial distinctions and exclusive privileges to the payday loan industry through the reinstitution of its exemption from the state’s usury cap.

At the Greater Phoenix Chamber of Commerce public affairs meeting Jan. 22, H2161 proponent Grant Woods suggested that the enforcement provisions of the bill would likely force the “ma and pa” payday loan companies, a small fraction of all payday lenders in the state, out of business.  While a remarkable admission, the real meaning of his remark is that the legislation will create a closed-shop oligopoly contrary to open-market principles. It will artificially control entry and exit into the industry.

More importantly, the statutory provision setting an annual percentage rate of 391 percent gives large payday loan companies a guaranteed rate of return without the application of any rate-of-return regulation.

There is little evidence of any other industry that has such an advantageous position, let alone in financial services.

In fact, in the financial services industry, interest rates generally respond to economic circumstances. When the monetary supply goes in a particular direction, the interest rates are adjusted to reflect that movement. When the Federal Reserve sets interest rates, corresponding changes occur in the marketplace.

By the industry’s own admission, payday loans do not respond to the marketplace or to the Federal Reserve rates — or for that matter to any economic circumstances.

If the Legislature approves an extended exemption from the state’s Consumer Loan Act allowing payday lenders to charge 391 percent, it will have locked into statute a permanent and artificial rate. Period.

Taking all this into account, we can only conclude that H2161 – or any amended legislation that locks in rates above the consumer loan cap of 36 percent – is protectionist legislation granted to a large corporate oligopoly in clear violation of the free market and economic principles.

The precedent that would be set by this is nothing short of breathtaking. We can only imagine what other industries would seek this type of protected status if the payday lenders are successful.

The payday lenders have suggested that if they go out of business as a result of no longer enjoying protected status in state statute, there will be a loss of $80 million in tax revenue to Arizona. A review of the major payday loan companies’ SEC filings indicates that this figure is an extrapolated aggregate of federal, state and local taxes, with a vast majority attributable to federal taxes.

More importantly, it fails to take into consideration the $150 million a year in fees taken out of Arizona by these out-of-state payday loan companies.

How much money is the state willing to have drained out of consumers’ pockets to bolster corporate coffers of out-of-state interests, particularly because it is money that can no longer be spent on local goods and services?

Likewise, the payday lenders overstate their claim that thousands of jobs will be lost. In fact, payday loan companies already experience extremely high rates of attrition, with more than 80 percent annual turnover in employment.

Robert Merry’s point about President Jackson is that he “wished merely to ensure that the levers of government were not used to bestow special beneficence upon a well positioned few.”

His views are as appropriate today as they were then.

- Barry M. Aarons is the owner of The Aarons Company LLC and represents Arizonans for Responsible Lending, a coalition of more than 200 organizations opposed to the extension of 400 percent payday lending in Arizona. He is also a senior research fellow for the Institute for Policy Innovation, a free-market think-tank located in Lewisville, Texas.

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As the sunset date for Arizona’s 10-year Payday Loan legislation draws near on July 1, 2010, city council has asked their intergovernmental affairs staff to keep a close watch on any legislation that may extend the licensing deadline.

In November 2008, Proposition 200 was rejected by voters in all 15 Arizona counties with 60 percent voting against extending the licensing of payday loan stores.

The council comments came during a Jan. 19 workshop when Intergovernmental Affairs Programs Director Brent Stoddard and Intergovernmental Programs Administrator Ryan Peters presented the 2010 state legislative agenda and update.

Sahuaro District Councilmember Steve Frate said he has received calls from constituents who were very concerned over payday loan legislation.

“There is no specific legislation, but we will monitor it,” Stoddard said.

[NOTE: HB2161, Andy Tobin's bill that would do away with the payday loan sunset date and allow 400% payday loans to conitnue, had just been introduced and had not yet been assigned to committee when the Glendale City Council met.]

Mayor Elaine Scruggs also had concerns about payday loan stores and has noted in the past at her community conversations with the mayor, payday loan stores were a very hot topic.

“Could you look at the legislation created in 2000 and see if the sunset date stipulates how much time is given for the stores to go away?” Scruggs asked. “I think if the businesses all shut down at once; there could be calls about all the vacant shopping centers. Glendale must have around 100 to 200 stores.”

Stoddard said they would look at the original legislation to see if there was a phase-out period, or if they would just be shut down and out of business.

Prior to the 2000 legislation, payday loan stores did not exist in the state. The stores offer small, short-term loans against a person’s paycheck or other source of income and charge fees that are often equal to an annual percentage of more then 350 percent.

The payday loan industry, which reportedly spent $15 million to try and get Prop. 200 passed in 2008, have now hired former state Attorney General Grant Woods and a lobbying firm, HighGround, to try and help them stay in business.

“My constituents have become more and more educated on the process and are skeptical,” Frate said. “Just talking about payday loans gets people’s attention.”

Previously, the city took steps to try and limit the concentration of the payday loan stores in the city by passing an amendment to the zoning ordinance in October 2006. It restricted their location within a minimum of 1,320 feet from any other payday loan store and said they could not locate within a minimum of 300 feet from any agricultural or residentially zoned property located within the city, or in an adjoining city or county, measured from property lines.

At that time, Scruggs said limiting the payday loan stores was an important issue for former Luke AFB Commander Gen. Robin Rand because the stores tended to gravitate towards military bases and preyed on military personnel.

Scruggs likened the city’s zoning ordinance restrictions to being a band aid.

“The real fix needs to be at the legislative level,” she said.

Reach the reporter at ejackman@star-times.com, or 623-847-4615.

Two years ago, Arizona voters registered opposition to payday lending by a 3-2 ratio, rejecting an industry whose financial products are tantamount to economic servitude.

They refused to extend payday lending’s exemption from state interest-rate limits. It was a people’s victory, supported and fought on moral high ground. It was a victory supported by several members of the Valley’s clergy, who spoke to the immorality of 400 percent interest rates.

The payday industry and its supporters are now demonstrating a disregard and disrespect for the will of the people.

House Bill 2161, supported by state Rep. Andy Tobin, would lift the sunset provision for payday lending. It would subjugate the people’s will to that of an industry that preys on those in our community who toil at modest wages or live on fixed income. It is an industry that exploits temporary financial needs to make hundreds of millions of dollars in fees.

I appeal to every honest, decent and fair-minded Arizonan to lend your voice and influence to deny passage of HB 2161.

If this state’s families believe in efforts to preserve family wealth, let us unite in defeating this ill-advised legislation.

- Henry L. Barnwell
Glendale

The writer is pastor emeritus of First New Life Baptist Church in Phoenix.

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They came from across the state to have their say. Actual citizens. They took time off from jobs and time out from other activities and interests and they got to the state Capitol early, to make sure they would have a chance to tell our leaders just what they think.

That 400 percent interest on a loan is a tad high.

That a phalanx of professional lobbyists and the moneybags they work for shouldn’t trump the wishes of the people of Arizona.

Sadly, they never got a chance to speak.

House Bill 2161, the payday-loan last-ditch rescue operation, was abruptly pulled off the agenda of the House Banking and Insurance Committee on Monday, no doubt to return another day when regular folks aren’t around.

“It’s a complete insult,” said Christina Plante, who took time off work and was fuming in the hallway after the 2 p.m. hearing was canceled – at 2 p.m. “I don’t doubt that the industry will have a heads-up when they need to be present and will be able to pay employees to be in the audience.”

I don’t doubt it, either. Big money is being piled into this push to keep alive an industry that charges 400 percent interest. The question is, can average folks fight that kind of dough?

Chances are you’ve never been inside your friendly neighborhood payday-loan center. More than 600 of them popped up all over the state, after the Legislature in 2000 carved out a 10-year exemption to the state’s 36 percent cap on interest rates. In so doing, our leaders ushered in a multibillion-dollar industry offering short-term, high-interest loans to tide people over until payday.

Say you need a $100 loan. You write a postdated check for $117.65 and walk out with five crisp 20s. Then, in two weeks, the payday people either cash your check or you extend the loan for another two weeks, for another interest payment of $17.65. In all, you can extend that $100 loan for up to six weeks, at a cost of $52.95.

The industry doesn’t like to talk about the biz in terms of annual rates, preferring to compare it with the charge on a bounced check or a late fee on your credit card. I can understand why, given that the interest rate is north of 400 percent.

Way north.

In 2008, the industry spent an eye-popping $14.8 million extolling the many benefits of payday loans and asking voters to allow the industry to become a permanent fixture in Arizona. (The “reform” measure also reduced the interest rate to a mere 391 percent).

We said no. Normally, that would settle it, given that six out of 10 voters pointed to the door.

But there is, quite simply, too much money to be made. How much, I don’t know.

I called Grant Woods, one of Gov. Jan Brewer’s campaign chairmen, to ask how much he’s being paid to be the big name in the payday-loan rescue operation. He didn’t return my call. But the industry has hired a slew of honey-tongued lobbyists to plead their case to the Arizona Legislature.

The result is HB 2161, which they insist is far different from the proposition panned by voters — chock full of industry-written reforms to their own practices.

Except, of course, that it isn’t all that much different from the one we rejected.

Thus far, the bill has one sponsor: House Majority Whip Andy Tobin, R-Paulden. It was Tobin who pulled the bill from Monday’s agenda, as a room full of citizens and activists waited to speak. “Clearly, there is not enough support yet for it to be debated,” he said.

Translation: The fix isn’t yet in, so we’re holding the bill for another day, when the votes are already lined up and it won’t matter what average citizens say.

That is, if average citizens even make it back to the Capitol to have a say.

Reach Roberts at laurie.roberts@arizonarepublic.com or 602-444-8635. Read her blog at robertsblog.azcentral.com

~~

To add your comments to this column at the Arizona Republic’s site, click here.

by Jodi Liggett

In 2008, Arizona voters said “No!” to payday lenders – loud and clear – rejecting the industry-sponsored Proposition 200. Apparently, the lenders are hard of hearing because they are back at it again.

Despite spending over $14 million attempting to push their “reforms,” Proposition 200 was defeated by overwhelming margins in nearly every voting district in the state. The campaign was one of the most misleading in Arizona history, with fake attack ads and lots of tough talk. But Arizona voters saw right through the deceptive tactics and said, “No.”

Perhaps payday lenders don’t understand that “no means no.” Now, they think they’ve spotted an easier target for their pitch, our Arizona legislators. We certainly expect our lawmakers to see through the industry’s straw-man arguments and faux reforms and to respect the will of their constituent voters.

Arizona can barely maintain the regulatory structure it has in this disastrous economy. For heaven’s sake, we can’t even keep our parks or rest stops open. How on Earth will we track hundreds of thousands of borrowers and loans and enforce compliance? It won’t work.

Here’s what will: When the law permitting payday loans sunsets this year, Arizona will join 15 other states, plus the District of Columbia, that cap interest rates at 36 percent.

That’s just what Congress did in 2006, when it outlawed payday loans above 36 percent interest for active-duty members of the military. By the way, that measure was supported by both John McCain and Barack Obama – because it makes sense.

At the Arizona Foundation for Women, we are members of the community proudly working every day to help women, children and other vulnerable people lead lives in which they are safe, healthy and economically independent.

Arizona women have suffered mightily in this downturn. Their poverty rate is higher, and they are more likely to face a foreclosure or personal bankruptcy than men.

We think that Arizona women and all Arizonans are entitled to the same protections extended to our military personnel.

In their own way, these families are on the front lines, too.

They are struggling to maintain their households against very tough odds right now. Here in Arizona, families existed quite happily without payday loans prior to the year 2000.

For 10 years, extending this credit “option” has allowed thousands of families to be trapped in an impossible spiral of borrowing and debt and for millions of dollars in profits to flow out of state. As a country, we’ve learned from the subprime mortgage crisis that creative “credit options” are often not what they’re cracked up to be.

It’s time to declare Arizona’s decade-long experiment with payday loans a failure . . . and say “No!” once and for all.

Jodi Liggett is director of research and public policy for Arizona Foundation for Women.

Payday lending reps have been posting their comments to this column all day… To add YOURS, click here.

Yesterday we scored an important victory in our battle to make sure the sun finally sets on 400% Payday Loans.  We made it clear to our representatives on the Banking and Insurance Committee that The People have spoken.  And they listened.  But this victory, while important, was just Round 1.

Rep. Andy Tobin, the sponsor of HB2161, decided at the 11th hour to pull the bill from consideration because of YOUR continued advocacy over the past week that secured at least four ‘No’ votes, enough to have killed the bill.

Arizonans for Responsible Lending sincerely thanks the legislators on the committee who made it clear they would not vote to extend predatory payday lending in our state.

BUT… as we see in today’s media coverage, the fight continues.

Jonathan Cooper of the Associated Press reports:

Lee Miller, a lobbyist for payday lenders, said Tobin’s decision to pull the bill is not a major setback for the industry.

“The lenders never anticipated that the bill as introduced would be exactly the bill that was sent to the governor,” Miller said. “We’re going to try to work all the kinks out up front rather than moving it along and amending it later.”

More battles lie ahead, beginning immediately.  And we won’t be victorious until this session comes to a close and we have succeeded in protecting the July 1 Sunset.

Please donate today to ensure we will have the resources to continue the fight.

HB 2161, as it stood yesterday, would allow 400% interest rates to continue indefinitely, with no enforceable regulation to protect consumers.  Any ‘reform’ that continues to allow triple-digit interest rates is no reform at all, and we will continue to oppose it.

The payday loan industry has $150 million dollars riding on this battle, in fees stripped from trapped Arizona borrowers every year.  They are not going to go away without a fight.  That’s why we need you, once again, to take action.

TAKE ACTION TODAY:

1) Donate $50, $100, $150  or whatever you can, today.  Help us raise $2,000 online by Friday.

2) Send a Letter to the Editor expressing why you believe the Sun Must SET on 400%. Let’s make sure our voices are heard in every corner of the state:

To submit a Letter to the Editor to the Arizona Republic, click here.

To submit a Letter to the Editor to the Phoenix Business Journal, click here.

To submit a Letter to the Editor to the Arizona Daily Star, click here.

To submit a Letter to the Editor to the Arizona Daily Sun, click here.

To submit a Letter to the Editor to the Prescott Daily Courier, Rep. Tobin’s home paper, click here.

To submit a Letter to the Editor to the Yuma Sun, click here.

To submit a Letter to the Editor to the Sierra Vista Herald, click here.

To submit a Letter to the Editor to the Casa Grande Dispatch, click here.

To submit a Letter to the Editor to the Payson Roundup, click here.

To submit a Letter to the Editor to the Green Valley News and Sun, click here.

To submit a Letter to the Editor to the Nogales International, click here.

To submit a letter to La Prensa Hispana, click here.

To submit a letter to La Voz, click here.

To find your local paper, click here.

~

We will keep you informed of new bills that arise as the session continues. With your help, we’ll be ready to answer whatever the payday lenders try next.

Thank you for taking action today!

Sincerely,

DEBBIE                                                                                 MARIAN

Sen. Debbie McCune Davis (D-Phoenix)                       Hon. Marian McClure (R-Tucson)
Co-Chair                                                                                 Co-Chair

Arizonans for Responsible Lending
www.NoMoreLoanSharks.com

PS:  Just like in 2008, the payday lenders are spending large amounts of money to promote phony industry-written reforms that don’t change the way they do business, and don’t end the debt trap.  Write a Letter to the Editor today.  Then, donate what you can to help us fight back.  Thank you!

~~~

Paid for by Arizonans for Responsible Lending

Major Funding by AARP Arizona
Center for Responsible Lending, N.C., SEIU, Washington, and SIMG, Tucson.
Additional Support from Arizona State Credit Union, UFCW Local 99
The Arizona Credit Union League, and Mi Familia Vota.

www.NoMoreLoanSharks.com

Two-dozen people who came to the Capitol Jan. 25 to oppose a bill that would allow payday lenders to continue doing business in Arizona left without saying a word. The bill didn’t last long enough in committee for them to testify.

Rep. Andy Tobin, a Republican from Paulden, pulled H2161 from the House Banking and Insurance Committee calendar due to a lack of votes. The bill would have changed the way payday lenders do business in Arizona, and it would have allowed the industry to continue operating after July.

All payday-loan businesses will be forced to close this year if the Legislature doesn’t pass a law to reauthorize the agreement.

Tobin said he had spoken to lawmakers from both parties who were supportive of the bill, and he thought it would have enough support to pass. But he later realized that the bill was bound for failure on the House floor.

“Clearly there is not enough support yet for this to be debated,” Tobin said at the committee hearing. “Right now we do not have consensus.”

Rep. Cloves Campbell, a Democrat from Phoenix, said he is now leaning toward voting against the bill because many of his constituents oppose the continuation of the payday loan industry. He had previously supported the idea of reauthorizing the industry.

“My community has spoken to me,” he said.

Opponents say payday lending should be eliminated because the high-interest loans trap people in a cycle of debt. Right now, the interest on a payday loan can reach nearly 400 percent. Other lenders, such as banks, are capped at 36 percent interest.

Payday loan supporters, however, say the lenders provide a service to people who need money but cannot qualify for a loan from a bank or credit union. Supporters also say abolishing the industry would put about 5,000 people out of work.

Tobin said he plans to work with industry representatives on an alternate plan that would allow payday lenders to keep their doors open.

“We have to find out here in Arizona if this industry can be regulated to the satisfaction of the consumer. And if they can, then we’ll be able to save jobs,” Tobin said.

David Higuera, political director for the anti-payday-loan group Arizonans for Responsible Lender, said the payday loan bill will probably be back in some form. He said he is concerned that the bill could return as a strike-everything amendment or as part of the budget bills.

“We’re not sure what will happen next, but we know that the industry has $150 million on the line,” Higuera said. “So they’re not going to go away without a fight.”

In 2008 voters rejected Proposition 200, an industry-sponsored ballot measure that would have allowed payday lenders to continue operating in Arizona while enacting new restrictions.

Rep. Robert Meza, a Phoenix Democrat, said the rejection of Prop. 200 sent a clear message about what voters think of payday loans.

“I’ve always consistently been against them. Arizonans do not want payday lenders in their neighborhoods,” Meza said.

Rep. Nancy McLain, who chairs the Banking and Insurance Committee, said she was disappointed that the bill didn’t get a hearing. The Bullhead City Republican said many of the bill’s opponents might not be aware of some of changes it made from Prop. 200. For example, she said, the bill caps interest at 15 percent for every $100 borrowed, doesn’t allow debt to roll over and would create a database so borrowers could take out only one payday loan at a time.

“I think they have a very definite niche that they fill for folks who don’t have a banking relationship for whatever reason, and can’t go into a bank and say, ‘I want an unsecured loan for $150 because I’ve got car repairs so I can get to work tomorrow.’ The banks aren’t going to do that,” McLain said after the hearing.

Opponents, too, wanted the bill to get a hearing. Kelly Griffith, of the Tucson-based Center for Economic Integrity, said people drove to the Capitol from as far away as Yuma, Prescott and Page to speak out against the bill, but they never got the opportunity. Griffith said she would have liked the debate to be heard in a public forum.

“It would’ve been very helpful for people that traveled very long distances to be able to enter their comments and give testimony,” she said.

To add your comments to this article, click here.

Contact the reporter at jeremy.duda@azcapitoltimes.com

by Howard Fischer, Capitol Media Services, in the Arizona Daily Star:

Efforts by the payday-loan industry to remain in Arizona after June 30 were dealt a serious – and potentially fatal – setback Monday when a key Democratic lawmaker said he won’t support what the lenders want.

Rep. Cloves Campbell, D-Phoenix, said payday lenders “haven’t been community-friendly . . . outside of doing business and taking money from us.” He added that the bill written by industry lobbyists still let lenders charge interest rates approaching 400 percent on an annual basis, which he said is unacceptable.

Campbell’s vote is crucial. He is the lone Democrat on the House Banking and Insurance Committee who had previously indicated a willingness to approve allowing payday lending to continue despite the 2008 public vote to shut it down on July 1.

House Majority Whip Andy Tobin, R-Paulden, who is sponsoring HB 2161 for the industry, said he will kill the plan unless it picks up some Democratic support.

Tobin needs Democratic votes to get the bill approved. Although Republicans control the Legislature, several GOP lawmakers have said they will not support continued allowance of payday lending.

Tobin had the measure withdrawn from committee consideration Monday after it was clear that he would not get bipartisan support. He said he will sit down with industry lobbyists to see what changes, if any, can be made to get some Democrats on board.

However, Campbell, who represents large portions of south Phoenix, said the industry has yet to offer anything that would help his constituents, starting with a lower interest rate.

Payday lending involves two-week loans of up to $500, with lenders now permitted to charge up to $17.85 for each $100 provided. That translates to more than 400 percent interest on an annual basis.

The special exemption for the industry from the state’s usury cap of 36 percent will expire on June 30. And voters, by a 3-2 ratio, killed an industry-sponsored initiative in 2008 to make the exemption permanent, even after lenders agreed to cut fees to $15 per $100 borrowed.

This new bill still has a $15 fee – about 390 percent interest on an annual basis – with a few other changes that payday lenders say makes it a better deal for borrowers.

Campbell, however, said that’s still too much, and it’s still not a good deal for borrowers.

Industry lobbyist Lee Miller said lenders cannot live with the 36 percent annual cap, saying that would never cover their costs on a two-week loan for $100. Miller said he will consult with lenders to see if they can live with something less than 390 percent.

“After you pay employees, the health plan, pay the rent, pay the taxes, there isn’t a tremendous amount of money left,” Miller said. He promised to “engage with” Campbell to see what he can support to permanently keep payday lending alive in Arizona.

Campbell said that only with “substantial changes” in the measure – including the interest rate – might he agree to support it. But even then, he said, it may be time to let payday lending go away.

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

He was particularly disturbed by what he said has been the industry’s lack of caring for the minority community until its lobbyists needed Democratic votes. Campbell is black and represents a district with many blacks and Hispanics.

“When it’s time for you to lose business, all of a sudden you find a new crop of friends,” Campbell said.

“And that’s what we turned out to be: a new crop of friends. You know how it works.”

The key provisions of what the industry wants are identical to what voters defeated, including the $15-per-$100 fee and a ban on “rollovers” in which one loan is paid off by taking out another, for an additional fee, which perpetuates a cycle of debt.

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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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In spite of spending more than $14.7 million – compared to about $1 million spent by opponents – nearly 60 percent of Arizona voters in November 2008 rejected the payday lending industry’s attempts to get a legal extension to stay in business.

Without the extension, the 10-year exemption to state usury laws that cap consumer loans at interest rates of 36 percent expires June 30 and payday lenders that are now allowed to charge interest rates in excess of 450 percent will have to shut down the next day. At that point, Arizona will join 15 other states and the District of Columbia where payday lending is outlawed.

Payday lending has proven to be such a failed experiment that not a single state has legalized it in the last five years. More states are headed the same direction as Arizona.

At the time of the defeat of Proposition 200 in 2008, the obvious and emphatic conclusion was that the will of voters was to get rid of payday lenders. But the industry that has been likened to loan sharking is making a last stand in the Legislature with a bill (HB 2161) that has been introduced by state Rep. Andy Tobin, R-Paulden, who will be seeking re-election to his third term this November.

The bill is essentially the same measure voters rejected and includes minor restrictions on the industry that, among other things, would drop the maximum interest clear down to 390 percent, allow a two-day grace period for a consumer to get out of a loan, outlaw loans to active-duty military, and prohibit multiple loans and loan rollovers.

Tobin’s new talking point is that he fears for the 3,000 people who work in the industry who will lose their jobs when the industry is forced to shut down.

What about the people who’ve been put out of work and small businesses that have been lost because payday lenders have sucked tens of millions of dollars out of the state’s economy each month that otherwise could have been spent – and gone a lot farther – at other businesses?

It’s also no secret that franchises and other national retailers steer clear of locations in or near centers where there are payday lenders. They know payday lenders are bad for their businesses.

It’s a technicality that the rejection of Proposition 200 in 2008 doesn’t fall under the state’s voter protection act that prohibits lawmakers from tinkering with voter-approved measures unless it’s to further the will of the voters. Nevertheless, the message was clear.

Fortunately, voters won’t need long memories to deal with lawmakers who missed the point of the 2008 vote.

This November every seat in the state House and Senate is up for election, as is the governor. Since Tobin’s legislative district is in Coconino and Yavapai counties, there’s not much Southern Arizonans can do about his re-election bid. But to get his bill passed in time to keep payday lenders in business as of July 1, he’s going to need two-thirds of both legislative bodies to make it emergency legislation and that means he is going to need lots of help.

Representatives from the Tucson region – including Republican Rep. Frank Antenori and Democrats Jorge Luis Garcia, Daniel Patterson, Nancy Young Wright, Steven Farley and David Bradley and Sen. Paula Aboud – have already voiced opposition to payday lending. That’s good.

Support for Tobin’s bill should be reason enough to vote any legislator out of office.

The bottom line for legislators is: either payday lenders go in July or you go in November.

Copyright  2010 Inside Tucson Business

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