Our Take: Payday Loans are Back

The legislative process and the will of voters received a quick kick in the pants of lawmakers this week.

This was done in an effort to legalize high interest loans which can put working poor families in a “debt trap”.

This all comes from House Bill 2496, which started out as a gentle-way bill on homeowners associations.

Thanks to the legislative sleight of hand known as the All Strike Amendment, it’s now a monster changing Arizona loan laws – and it’s on a fast track to pass.

It would allow short term loans with an annual percentage rate above 164%.

Yes. That’s right. Over 164 percent interest.

Last year they called them “flexible loans”

It’s a bad idea.

But this is not original.

This is, in fact, something Arizona voters banned by a 3-2 margin in 2008.

Since voters banned high-interest payday loans, the industry has been trying to get Arizona lawmakers to put a sock in voters’ mouths.

EDITORIAL: Why the Federal Government Should Regulate Payday Loans

These high interest products are no longer called payday loans. Too much stigma.

This year, the operational term is “consumer access line of credit”.

Last year they were called “flexible loans”. This effort failed.

This year’s high interest loan bill is presented as something completely different. It is accompanied by an analysis to show that a borrower has the capacity to repay, as well as an annual borrowing limit.

It can move quickly with little chance of public comment as it was grafted onto a bill that had already been passed by the House. It is the black magic of the amendment strikes everything.

Speakers at Tuesday’s hearing: it’s a trap

The only public hearing took place on Tuesday in the Senate Appropriations Committee, which is chaired by Senator Debbie Lesko, who is defending the amendment to the loan law passed by voters.

During this hearing, advocates who work with the working poor and vulnerable families and children denounced the idea of ​​predatory lending with a new name. And the same old smell.

Joshua Oehler of the Children’s Action Alliance used the term “debt trap” to tell the committee that people could borrow the maximum of $ 2,500 per year, make minimum payments, and borrow again the following year.

ROBERT: 165% interest loans? Lawmakers say YES!

Tucson attorney Mary Judge Ryan said the wording of the bill speaks of “repeated non-commercial loans for personal, family and household purposes.”

Kathy Jorgensen, Society of Saint Vincent de Paul, said; “It’s like every year it’s a new pattern.

Supporters of the bill say it meets the needs of people with bad or no credit who need money fast.

Sam Richard, executive director of Protecting Arizona’s Family Coalition, says it’s true that there are limited options for these people, but options do exist through credit unions, faith communities, and community organizations with programs to special loan.

He said, “We much prefer to spend our time developing and developing these options,” which are aimed at helping people, not exploiting their needs with loans at very high interest rates.

Instead, “year after year we have to fight these bills,” said Richard.

Here’s a better way to help the poor

Lawmakers would better serve the interests of all Arizona residents if they honor the expressed will of voters and eliminate this year’s predatory lending enabling legislation.

Lesko says the purpose of this latest attempt to get around the voter ban on high interest rates is to give “people who are in these bad situations, who have bad credit, another option.”

If so, she should meet with community advocates and faith groups who work with people in these “bad situations” to seek solutions that do not involve the debt trap.

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