Proposal creating new loans from payday lenders hits snag
PHOENIX - A proposal allowing payday lenders barred from operating in the state under a 2008 voter initiative to offer a new high-interest loan product has hit a major snag in the Arizona Senate.
Republican Rep. J.D. Mesnard's bill was set for a hearing in the Senate finance committee Wednesday, but it was scratched from the agenda. Since this is the last week for House bills to be heard in all but one Senate committee, the proposal may be dead for the session.
Mesnard said it appears the Finance Committee votes weren't there. There is a faint hope the bill could be heard in the Appropriations Committee, which can still meet.
"Whether or not there are other places that bill or a similar bill may show up in the closing weeks of the session I don't really know," Mesnard said Wednesday. "I think people are exploring that possibility, but all I know at this moment is it isn't moving in the Finance Committee.
Consumer advocates railed against Mesnard's bill, saying voters rejected ultra-high interest loans when they voted to axe payday loans by a 2 to 1 margin in 2008.
Jean Ann Fox of Prescott Valley is among the vocal opponents. She is a financial services fellow with the Consumer Federation of America, which also opposes the bill as well as Proposition 200 in 2008. Fox was on the "No
on Prop. 200" steering committee.
She called the bill "the latest tactic by the payday loan industry to bring debt-trap lending back to Arizona." Because of its accompanying daily "customary" fee, the flex loans with a 36 percent interest rate actually would cost 218.5 percent on an annual basis, she said.
Democrats had failed to block the bill in the Arizona House, where it passed on a 31-29 vote on March 4.
Representatives Karen Fann and Noel Campbell of Prescott were among the yes votes.
Fann said the House heard from opponents as well as supporters, who said they had no credit to get bank loans for emergencies such as broken-down cars and hospital bills.
- The Daily Courier also contributed to this article