Payday Loan fight to continue statewide

healthcommissionSo far the payday loan industry has easily bested reformers but the fight will continue this year with another state initiative attempt to force a public vote.

Kathryn Evans, a community organizer for Communities Creating Opportunity, on Friday asked for support from the Kansas City Health Commission.

CCO is a group of religious and community leaders that promotes equity issues in Missouri and Kansas.

The average payday loan interest rate is 400 percent, the legal limit is almost 2000 percent, Evans said, and the loans are like the potato chip commercial: “You can’t eat just one.”

She told of a man who took out a payday loan for a hospital bill for treatment of his wife’s broken leg. It led to more loans and loss of the couples’ house.

In another case, she said, a mentally ill mother of three children used a loan with 500 percent interest to pay her utility bills. The payday loan company started taking $220 out of her bank account each month, leaving her without money to feed her children.

CCO and other groups tried for 12 years to get the Missouri General Assembly to impose tougher regulations on payday lending and lost each year.

In 2012, she said, they launched an effort to force on the ballot a measure that would have limited the interest rate to 36 percent – the highest level recommended by federal officials.

The signatures were gathered but constant legal challenges and opposition kept the measure off the ballot, she said.

The payday loan groups are major political contributors and Missouri lawmakers have no limits on contributions, she said.

A Sunday article in the Kansas City Star headlined “The No-Limit Legislature” says Missouri is the only state without limits on campaign donations or on how much an elected official can accept in personal gifts from lobbyists.

Also from the article:

A group called Missourians for Responsible Government spent $2.8 million to stop the 2012 ballot measure to limit the payday loans.

In 2010, the last serious legislative effort to impose more such restrictions, the payday loan industry gave nearly $400,000 to legislators and political committees.

That bill died in the House Financial Institutions Committee, where the vice chairman owned a payday loan store.

The unlimited contributions and term limits, which tend weaken incumbents and make them less informed, also make the money speak louder, Sen. Brad Lager, a Savannah Republican, told the Kansas City Star.

“They (lawmakers) don’t want to shut off the gravy train,” he said.

But the Star reported that supporters of ethics reform have already filed at least two ballot initiatives for this year.

“The foxes have demonstrated they cannot protect the hen house,” Sean Soendker Nicholson, executive director of Progress Missouri, told the Star. “It’s going to take something on the ballot.”

Apparently there will be many people gathering signatures this year.

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