Phoenix, AZ – A plan to ask voters to kill the payday loan industry has folded. Arizona Public Radio's Howard Fischer explains.
State law allows payday lenders to provide up to $500 for two
weeks at a fee of $17.50 for each $100 borrowed. That's an annual
percentage rate of more than 400 percent. The initiative would
have put lenders back under state usury laws which cap interest
at 36 percent. But industry lobbyist Stan Barnes said lenders
don't charge interest. They charge a fee for a short-term, high-
(36 percent APR, if you want to talk that way, would equal some
dollar and change return which is not enough to keep the lights
Backers of the petition drive to put payday lenders out of
business said Monday they got less than a fifth of the signatures
needed to qualify for the ballot. But Rep. Debbie McCune Davis
said they will continue to work to defeat a separate industry-
backed initiative to give lenders a permanent exemption from
usury laws. That raises the question of whether those who now
depend on payday loans could still borrow money.
(There are probably some people who could. And there are others
who will find family or friends to borrow from. And there are
some who probably won't, but perhaps shouldn't.)
But McCune Davis said eliminating payday loans is not unwarranted
government intrusion on the right of invididuals to control their
For Arizona Public Radio, this is Howard Fischer.