24 Jan Religious, NAACP leaders: Let payday law die
By Jerry Mitchell
Mississippi religious leaders called Monday for state lawmakers to let a law sunset that permits payday lenders to charge the equivalent of 572 percent interest.
The Rev. Frank Spencer, chief executive officer of Stewpot Community Services in Jackson, said payday lending is immoral and entraps thousands of Mississippians.
“It’s more insidious than quicksand,” he said at a news conference.
Mississippi’s 572-percent rate is the highest in the Southeast and one of the highest in the nation.
A Clarion-Ledger series last month chronicled how some Mississippians have been caught in a “payday trap,” spiraling deeper into debt.
Mississippi law enabling payday lending expires in 2012. North Carolina let its payday law sunset in 2006. Seven states and the District of Columbia have made similar changes.
If North Carolina and other states can go out of the payday lending business, why not Mississippi? asked Derrick Johnson, president of the Mississippi NAACP.
Under a law passed by Congress, soldiers can’t be charged more than 36 percent interest by payday lenders.
If that law was passed for military personnel as a matter of “national security,” why not for average citizens, too? he asked.
Payday lenders have defended their practice, saying these interest rates are misleading because they are short-term loans. They say they’re meant to help people with cash flow problems.
On Monday, Spencer challenged that claim, saying these lenders actually depend on “flipping” loans to make money. According to the Center for the Responsible Lending, the average loan is flipped nine times in a year, he said.
Under current Mississippi law, payday lenders can charge $21.95 for each $100 borrowed up to $400 total, including fees. For a two-week loan, that translates into 572-percent annual interest rate. Payday loans are due the next payday, if it’s one week or a month.
Under the Senate version, consumers would have at least 28 days to pay on loans of $301 to $500. On loans of $300 or less, the fee would be reduced to $20, and the loan period would be anywhere between one and 21 days.
Under the House version, consumers would have at least 28 days to pay off loans of $201 to $500. On loans of $200 or less, the fee would be $20, and the loan period would be up to 21 days.
Dan Robinson, who owns 28 payday lending stores in Mississippi, has predicted the House and Senate would hammer out differences in conference committee.
Under the House version, he has said payday lenders would look at a 20 percent to 25 percent cut in revenue. He guessed the Senate version would bring a 10 percent to 15 percent cut.