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Mon, Oct. 21

Editorial: Respect will of voters versus predatory lending

A host of bills made their way through the Legislature this session concerning citizen initiatives. Only one, mostly affecting how signature gatherers are paid, has made it to the governor.

In that case, signature gatherers can still be paid – but not “per signature,” they can be paid hourly, for example.

However, the citizen initiative process – otherwise – is largely still intact. Other than the added ability making it easier for lawmakers to challenge initiatives in court, all that remains is respect.

That would be “respect” for the process.

An example of this, or a lack thereof, comes in a late amendment to HB2496, legislation concerning homeowners associations. The amendment would allow payday lenders to offer to customers a “Consumer Access Line of Credit,” which would carry a maximum annual interest rate of 164 percent for loans up to $2,500.

What’s lacking is following the will of the voters, specifically a 2008 voter initiative that targeted predatory lending, also known as payday loans. Voters rejected them by 60 percent in 2008.

The new offering – the line of credit – would allow an interest rate of 0.45 percent a day, or 164 percent a year, with no additional fees. Lenders would also have to check credit histories to ensure borrowers have the ability to repay the loan, according to the Associated Press. Basic terms call for repayment in one year and rules will require lenders to work out payment plans and freeze interest for borrowers struggling to make their payments.

This move follows weeks of talk and prior efforts. Last year’s proposal, which failed to emerge from the Legislature, was for “flex loans” with interest rates of about 200 percent a year. Democrats and Republicans have opposed giving predatory lenders the ability to return to the state.

Backers say the loans give people without credit a way to get needed cash.

Still, Kathy Jorgensen of the St. Vincent De Paul Society said it best.

“Basic Christian principles require the community to provide protection for the poor and the vulnerable,” she told the lawmakers. “Our parishes and organizations such as St. Vincent de Paul witness the high cost of being poor every day when we assist families forced into alarmingly high payday and auto title loans to cover unexpected expense.”

Some lenders are fair and fly straight, but a change in lending practices would be better. We should be offering people loans that make sense.

The proposal now awaits consideration by the full Senate.

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