State payday lenders attempt to keep industry alive
Phoenix, AZ – State law generally limits interest on loans to no more than 36
percent a year. But an exception created a decade ago permits
lenders to charge $17.85 for each $100 borrowed for two weeks.
That translates out to more than 400 percent. That exception
expires in June. And an industry-funded initiative in 2008 to let
payday lenders stay in business was defeated. Rep. Debbie McCune
Davis said that should be the end of it.
(There was a complete and open discussion with the public about
the function of payday lenders, how they operate in the
community. And the voters rejected the argument that what they
provide is value.)
But Sen. Russell Pearce has agreed to let lenders try to push a
bill through his Appropriations Committee to let payday loans
remain legal. He said they meet a legitimate need.
(This is a loan of last resort for some folks. And its pulling
the safety net out of those who may need to use it. I would hope
they don't use it. I'm not a fan of payday loans. But I am a fan
of the free market.)
There are some differences between what voters rejected and what
is being presented to lawmakers. One says if payday lenders can
stay in business they will have to give 1 1/2 percent of fees
collected to community groups to help the needy, a figure one
lobbyist pegged at about $1.5 million a year. For Arizona Public
Radio this is Howard Fischer.