The payday loan industry is known for preying on people. People get caught in debt when they use payday loans; they are not able to pay off the principal amount let alone the interest.
“When people use payday loans, they get caught in a cycle of poverty, said Rep. Robert Meza, D-Phoenix.
“These people have voiced concern about the payday loans for years,” added Meza, who is a member of the House Banking and Insurance Committee.
However, Arizona House Bill 2161, which was heard by the House Banking and Insurance Committee on Monday, attempts to reform this awful industry and fails. It is unfair to constituents that this bill is even up for debate. Voters rejected the idea of Proposition 200, which dealt with payday loan regulations, in the 2008 election cycle.
“The regulations that are being included in this bill are far different from the ones presented to the voters,” said Rep. Nancy McLain, R-Bullhead City, who is chairwoman of the House Banking and Insurance Committee.
However, an analysis by Capitol Media Services shows McLain is sorely mistaken. HB 2161 contains many issues voters rejected in the last election cycle.
For instance, this bill lowers the highest payment charged per $100 borrowed from $17.85 to $15, which is an interest rate of 400 percent. It also would not allow consumers to roll over loans. These measures sound good on paper, but they are meaningless reforms because no one would be able to enforce them. In turn, lenders would still be able to prey on their patrons.
“The problem is that there aren’t enough people to audit the payday loans. There is no one to see if they are [monitoring lenders] properly,” said Meza.
Perhaps the most important provision of this bill is that payday lenders would be allowed to operate past June 30 of this year, the “sunset date” for payday loan companies. The bill would abolish this sunset date and let lenders continue their scheming practices.
“They have been here nine years and they have never reinvested in Arizona and they never plan to,” Meza said.
Lenders take advantage of people in poverty and hurt the community by trapping people in debt.
Meza will vote no on this bill.
“If it went to the ballot again [voters] would reject it again,” Meza said.
However, McLain sang a much different tune. She agreed to let her committee hear it, will vote yes, and sees it passing before the full House.
Her confidence is muddled by a fraudulent act. This bill should be seen for what it is — nothing but smoke and mirrors. We must let the sun set on payday lenders.
Reach Andrew at andrew.hedlund@asu.edu
