Newspaper article St Louis Post-Dispatch (MO)

Shameless; Our View; A Phony Payday Loan Reform. Because 1,950 Percent Is Not Enough

Newspaper article St Louis Post-Dispatch (MO)

Shameless; Our View; A Phony Payday Loan Reform. Because 1,950 Percent Is Not Enough

Article excerpt

When a payday lending "reform" bill sails through the Missouri Senate and the payday lending industry doesn't scream bloody murder, you can be sure of two things:

One, it's not really a reform. And two, the working poor are going to take it in the shorts. Again.

Seriously, how much more do these guys want? Already the average payday loan in Missouri is for $306 and carries an annual percentage rate of 455 percent. State law allows the industry to charge interest and fees of as much as 75 percent of the loan's principal. Borrow $200 and pay back $350, and you're looking at an APR of 1,950 percent.

That's not enough?

Well, no. The industry and its lobbyists spread more than $1.6 million on state lawmakers' campaigns between 2003 and 2012, and the spigot is still on. Last year just two payday companies QC Holdings and Advance America contributed $83,600 to various Missouri legislators and party committees. Remember, 2013 wasn't an election year.

The sponsor of the "reform bill" (Senate Bill 694) that passed the Senate last month, Republican Mike Cunningham of Rogersville, got $2,500 from QC Holdings; he doesn't run for re-election until 2016.

The big "reform" in the reform bill would prohibit payday lenders from renewing (or "rolling over") loans, which currently can be done up to six times. Borrowers would instead be eligible for an extended payment plan of up to 120 days. But here's the beautiful part: The lenders wouldn't actually have to tell the borrower about the extended payment plan as long as there was a sign on the wall and some brochures lying around.

Also, there's nothing to prevent a lender from closing out one loan and opening another. Instead of rolling over a loan, the lender can roll it into a new loan. Easy-peasy.

Here's the even more beautiful part: In return for accepting these onerous "reforms," payday lenders would no longer be limited to charging a mere 75 percent of the principal in loans and fees. They could charge as much as they want. Borrow $200, pay back $500, $600. …

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