22 Feb Gov. expected to sign payday loan bill
by Jerry Mitchell
Gov. Haley Barbour plans to sign a bill aimed at reducing the 572-percent equivalent interest on payday loans, his office said Monday.
“The legislation has not reached the governor’s office yet, but once it does – unless there’s some unforeseen problem or surprise in it – Gov. Barbour is likely to sign it,” said spokesman Dan Turner.
Last week, lawmakers in the Senate and House compromised on a bill to reduce fees on payday loans.
Religious leaders are urging Barbour to veto House Bill 455.
“Despite requests by this group and others for meaningful reforms, the bill does not go far enough to protect working families from the highest fees in the Southeast on payday loans,” the Rev. Carol Stewart, who chairs the Mississippi Religious Leadership Conference, told Barbour in a letter. “Furthermore, the bill lacks a critical enforcement tool – a statewide database – to ensure that lenders and borrowers are following the law.”
Because the statute doesn’t sunset until 2012, “we ask you to veto this bill, allowing the Legislature and other groups more time to study the problems, to identify or recommend solutions and move Mississippi closer to a fairer scheme of authorizing such short term, immediate loans,” she wrote.
In December, a Clarion-Ledger series exposed how some people have been caught in “payday debt,” falling further into financial trouble. The Center for Responsible Lending estimates the average Mississippian pays back $1,041 for each $350 borrowed.
In Mississippi, a typical two-week payday loan translates into the equivalent of 572-percent interest – one of the highest rates in the nation.
Under current law, a Mississippian receiving a payday loan writes a check for the amount borrowed, plus a fee of up to $21.95 per $100 borrowed. If a borrower fails to repay the loan on time, the check can be cashed.
Under the new law, that fee would be reduced to $20 per $100 on loans up to $250, which would translate into 521 percent annually.
For loans of $251 to $500, the fee would be $21.95 per $100, but Mississippians would be given at least 28 days to pay back the loans. The extra time would reduce the equivalent interest rate to 243 percent.
Under the current law, payday loans, including fees, are limited to $400.
Upon hearing the news that Barbour would likely sign the legislation, Dan Robinson of Flowood, who owns 28 payday lending stores in Mississippi, replied, “We’re definitely pleased. Going through the legislative process is never easy. I do think the legislators looked at our track record and saw we had a 13-year track record with less complaints than any other business.”
Many lawmakers told payday lenders there was no need to change because of the lack of complaints, he said. “The only ones complaining were the special interest groups that didn’t use our services, but they were telling others how to live their lives.”