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Arizona league applauds payday lenders defeat
PHOENIX (3/19/10)--An Arizona State Senate committee Tuesday voted down a payday lending industry-sponsored measure that would have indefinitely continued payday lenders’ exemption from state laws that limit interest on loans to more than 36% a year. The move was applauded by the Arizona Credit Union League. The Senate Appropriations Committee killed the measure on a 5-3 vote. The exemption, approved about 10 years ago, expires June 30 ( March 17). Austin De Bey, Arizona league vice president of governmental affairs, was at the Tuesday hearing. “Arizona’s current payday lending model works against the credit union philosophy of ‘People Helping People,’” he told News Now. “As we began to see more and more members needing help after falling victim to the debt trap, it became time for the league and member credit unions to tell our legislature the ‘truth’ about the product. “Arizona credit unions stepped up once again and played a key role in defeating the latest attempt to remove the sunset date,” he concluded. “Our position is that credit unions see the harmful effects these loan products have on our members,” the league said in an e-mail to News Now. “We are often times the ones that are left to pick up the pieces after a member has fallen victim to a payday lending debt trap. The voters spoke in 2008 and it is time for the industry to either operate under the 36% usury cap or leave the state of Arizona.” Payday lenders were allowed to operate and had a special carve out to charge triple-digit interest rates starting in 2000, said the league. Arizona’s usury cap is 36% for all other lenders. When the law was created, lawmakers put into place a sunset date for 10 years after the law’s effective date. The sunset date is July 1. In 2008, the payday lenders attempted to circumvent the legislature with a voter protected initiative that would remove the sunset date, the league added. The campaign cost them $13 million. At that time, the Arizona league joined the opposing campaign, “No on Prop 200.” The league said payday lenders gave a misleading message that the law would reform the industry, when in truth it would allow payday lenders to continue to charge a 391% annual percentage rate. The proposition was defeated by a vote of 60% to 40% in the 2008 election, the league said. The league joined Arizonans for Responsible Lending, a coalition to oppose the removal of the sunset date again in 2010, and through its grassroots and lobbying efforts it was able to help the proposition.
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