Scandalous payday loan rates in Missouri prompt petitions
The Missouri legislature’s failure to do its job has again raised the prospect of citizens taking matters into their own hands through a ballot initiative.
Lawmakers’ continuous refusal to deal with Missouri’s deserved reputation as the nation’s “puppy mill capital” paved the way for last year’s ballot initiative requiring humane treatment of breeding dogs and their puppies.
Only after the measure passed did leaders get serious about rewriting the state’s lax laws — if only to water down the voter-approved regulations.
Likewise, the legislature has refused for several years to take on substantive reform of the loose laws that make Missouri’s payday lending industry the most plentiful and permissive in the nation.
Frustrated by the legislature’s inaction and an effort this year to pass a sham reform bill, a coalition of faith-based and civic groups has united to attempt to place an initiative petition on the 2012 statewide ballot.
The petition, which has been approved for circulation, would cap the annual percentage rate on a short-term loan at 36 percent, which is the limit that Congress approved for loans to U.S. military families. Seventeen states have also capped the rate at 36 percent. Missouri’s ceiling is 1,950 percent, with the average annual percentage rate on payday loans last year at 444.61 percent.
Gathering a sufficient number of signatures to place an initiative petition on the statewide ballot is a daunting task. However, reformers in Arizona and Montana pulled it off, and voters in both states approved substantial changes.
Missouri’s recent history with payday loan reform attempts is abysmal. In 2009, the House speaker refused to assign legislation prepared by Democrat Mary Still of Columbia to a committee. In 2010, the same House leader, Republican Ron Richard (now a state senator), sent Still’s bill to a committee chaired by a legislator who operated a payday loan business.
In this year’s session, Republicans in the House pushed through a bill that capped the annual percentage rate at 1,564 — plenty high for Missouri to maintain its ignominious reputation as the nation’s payday loan capital. Fortunately that deceptive “reform” bill never moved in the Senate.
Lenders say a cap of 36 percent annual interest would kill the short-term lending industry in Missouri, leaving citizens with poor credit and banking histories nowhere to go if they run into trouble. But that’s the legislature’s fault for not looking in good faith for a middle ground. There is simply no excuse for Missouri’s lending laws to be vastly more permissive than any other state.
“I saw what happened every time (Still) brought a bill to the legislature,” said Jim Bryan, a retired United Methodist pastor from Columbia who is leading the reform coalition. “We’re basically concerned about the fairness of these institutions preying on people in financial distress.”
There is a legitimate concern with Missouri’s initiative petition process being misused by out-of-state individuals and interest groups attempting to push a cause. But payday lending reform is a homegrown attempt worth pursuing, and one that the state legislature brought upon itself.
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