Laurie Roberts

opinion columnist

The payday loan sharks are circling once again.



The good news: Their latest set of fangs are less razor sharp than previously.

The bad news: Those pearly whites are still poised to take a sizable bite out of struggling Arizonans at their most desperate moments.

This year, out-of-state lenders have tapped Sen. Debbie Lesko, R-Peoria, to introduce a last-minute 28-page proposal, just in time for the last week of public hearings on bills at the Legislature.

House Bill 2496 would allow people with poor credit ratings to borrow up to $2,500 a year at the low, low interest rate of 164.25 percent.

To hear some Republican legislators tell it, these out-of-state lenders are basically a modern-day Mother Teresa.

“This is a godsend to the working poor,” Sen. John Kavanagh, R-Fountain Hills, said during Tuesday’s one and only public hearing on the bill, before the Senate Appropriations Committee.

The payday loan industry has been trying to get back into Arizona ever since voters kicked it out in 2008.

There is a crying need, we are told, for struggling families to have access to loans for those times when an emergency pops up, when the car needs repairing or the kid breaks his arm or say, a painter has a job but needs a loan to buy the supplies up front.

Actually, I agree that the need is there. We just differ, apparently, on when help becomes highway robbery. Helping the poor shouldn't involving bleeding them of every last nickel.

Rev. Reginald Walton wasn’t quite picking up that Mother Teresa vibe either, telling legislators they aren’t doing the poor any favors by offering loans at predatory interest rates.

“Six thousand dollars for a $2,500 loan is a debt trap,” he said.

I'll give them this. The bill certainly is better than the old payday loans, which were overwhelmingly outlawed by voters in 2008. It’s better than last year’s proposed “flex loan” scheme or the current auto-title loans on every other street corner, offering money at 204 percent interest.

This bill would allow someone to take out no more than $2,500 in unsecured loans every year and create a statewide database to ensure that the limit isn't exceeded. It would require lenders to loan only to those deemed to have the ability to repay within a year. It also would require them to freeze the interest rate and devise a repayment plan when someone can’t keep up on the payments and requests help.

But a 164.25 percent interest rate?

According to Jeff Taylor of the Salvation Army, some of these companies are lending at rates of 60 to 90 to 120 percent in other states.

Here, they want to charge 164.25 percent.

The bill is being pushed by the Arizona Financial Choice Association, the Online Lenders Alliance and a number of out-of-state lenders hoping to sink their teeth into Arizona’s poor.

It’s opposed by a litany of community groups, including the Society of St. Vincent de Paul, the Children’s Action Alliance, the Arizona Coalition to End Homelessness, the Salvation Army, the William E. Morris Institute for Justice and the Coalition to End Sexual and Domestic Violence.

So naturally, it passed on Tuesday, 6-4.