Proposal creating new loans from payday lenders hits snagPosted: Updated:
A proposal allowing payday lenders barred from operating in the state under a 2008 voter initiative to offer a new high-interest loan product has hit a major snag in the Arizona Senate.
Republican Rep. J.D. Mesnard's bill was set for a hearing in the Senate finance committee Wednesday, but it was scratched from the agenda. Since this is the last week for House bills to be heard in all but one Senate committee, the proposal may be dead for the session.
Mesnard said it appears the Finance Committee votes weren't there. There is a faint hope the bill could be heard in the Appropriations Committee, which can still meet.
"Whether or not there are other places that bill or a similar bill may show up in the closing weeks of the session I don't really know," Mesnard said Wednesday. "I think people are exploring that possibility, but all I know at this moment is it isn't moving in the Finance Committee.
Consumer advocates railed against Mesnard's bill, saying voters rejected ultra-high interest loans when they voted to axe payday loans by a 2 to 1 margin in 2008.
Democrats had failed to block the bill in the Arizona House, where it passed on a 31-29 vote on March 4. Rep. Debbie McCune Davis, D-Phoenix, said House Bill 2611 would give "predatory lenders" the green light to return to Arizona.
The old payday loans were issued after a borrower handed over a blank check that the lender agreed to hold for a couple of weeks - until the borrower's next payday. They had interest rates and fees in excess of 400 percent a year.
Yearly interest and fees on the new "flex loans" would be 200 percent a year. They would be unsecured, but opponents note that lenders often require direct access to a person's bank account so they can automatically deduct payments.
McCune Davis said opponents both inside and outside the Legislature will be watching for Mesnard's proposal to reappear.
"As you know, at the Legislature we always have Easter season, when even the dead bills come back to life," McCune Davis said. "The community's watching, and we're ready to step back in if the bill remerges."
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