With the tragic murder last Friday night of Phoenix Police Officer George Cortez, Jr. at a Check Cashing business located at 83rd Avenue & Encanto, this brings up a controversy that affects a large amount of our citizens.
On virtually every major intersection in Phoenix, you find these Check Cashing/Pay Day Loan businesses. These 'predatory lenders' prey on the lower economic class in order to make obscene profits.
In the past four years, the number of payday-loan offices in Arizona has nearly tripled to 610, and there are more of these offices across the state than McDonald's restaurants and Starbucks coffee shops combined. Arizona also has a higher number of payday-loan offices per capita than the national average.
"A payday loan is a short-term cash advance that is given to a borrower who
promises to repay the loan plus a fee after the next payday. They are easy to
obtain: A borrower needs only a checking account and a steady job to qualify.
Loans of up to $500 are available instantly, usually for two weeks but at a
steep price: the fees, or interest, on a two-week loan can be the equivalent of
an annual interest rate as high as 460 percent."
Arizona began licensing payday-loan offices in 2000, following intense lobbying by the industry. *When Arizona’s banking industrysought legislation that would allow for higher interest rates on controversial “title loans,” lobbyists turned to Arizona Rep. Jim Weiers. Weiers, the Speaker of the AZ House of Representatives from Phoenix, sponsored a bill to do just that.
He had a unique perspective on the business— Weiers ran BHFC Financial, a loan company that made high-risk, high-interest loans through automobile dealerships to people with poor credit.
* Source - http://www.openairwaves.org/docs/publici/pi_2002_05.pdf
Page 6 of 8
A sub prime car-loan lender, Weiers once said,
**" I have never made a loan (on a car) for less than
30 percent"!
**Source -
http://www.tucsonweekly.com/gbase/Currents/Content?oid=44868
So we all now know how this mess started. There is a lone voice out there trying to change this.
State Representative Marian McClure, R-Tucson has been the champion of this debate, sponsoring legislation (Bill SB1446). Major facets of Bill SB1446, besides the much-debated sunset, include limiting borrowers to just one payday loan at any given time, establishing a consumer database so that payday loan lenders can confirm that consumers have no other outstanding payday loans, mandating that online payday lenders be required to meet state licensure standards, and allowing consumers longer periods over which to repay their obligations. As cleared by the House at the month’s start, the payday loan bill would have entirely done away with the 2010 sunset in exchange for affording consumers more comprehensive protections, which some say would eliminate the need for the sunset.
Other lawmakers want to keep a payday loan sunset of some kind, even if it’s later than 2010. They say that regulations are not enough, and want to know that an end to the industry is in sight. A 2018 sunset date was offered up as a means of compromise, but was lost in argument as legislators came to blows over the essential question of whether the state sought to ultimately eliminate the question of payday loans altogether, and whether the potential restrictive legislation was just meant to cover consumers until that point. The Bill passed the House but failed in the Senate.
But McClure insists it is a fight worth pursuing. She needs 153,365 signatures by July 2008 to get the measure on the 2008 ballot. McClure acknowledges that she has little hope of raising enough money to hire professional signature-gatherers, but isn't letting that bring her down. She says that she’s accumulated enough senior citizen volunteers who are willing to stake out high-traffic locations, like supermarkets, all day if necessary.
These Check Cashing/Pay Day Loan Centers have become a HUGE business in Arizona. Many editorials have been written on this problem. One of the best editorials was written by Jim Kiser and Bruce L. Dusenberry.
Let's hope during the next session of the Legislature, our lawmakers make a serious effort to rid Arizona of these predatory lenders.
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