Attorney General Jay Nixon, St. Louis Leaders Call for Major Reform of Payday Loan Industry
subscribe
|
"The payday loan industry is making millions each year by holding Missouri's most vulnerable families hostage," said Attorney General Nixon. "Families living in poverty, who are simply trying to put food on the table, should not be slammed with an APR on average of over 422 percent. That's outrageous. The families impacted by payday loans aren't political insiders. They don't have lobbyists in Jefferson City. They are our most vulnerable citizens, and that's why it's so important that we stand up and fight on their behalf. If Gov. Blunt is truly committed to lifting Missouri families out of poverty, he will join us in supporting legislation that significantly reforms the payday loan industry."
Missouri has some of the most lenient payday loan laws in the nation. Because of Missouri's lax laws, some loan recipients could end up being charged as much as 1,950 percent APR (with an average of 422 percent). According to the most recent report by the Division of Finance, nearly 3 million payday loans were issued last year and the number of new loan licenses given to lenders has increased by 69% since 2003. The result of these lenient laws: Missourian families paid $317 million in fees and interest in 2005, second in actual dollars only to the state of California.
"Once again we see corporate greed rear its ugly head at the expense of our poorest families," said Rev. Douglas Parnham, pastor at the Community Church of God in St. Louis. "Payday loans are crippling our communities. I am so proud to join our elected leaders in addressing this problem."
"I'm hopeful that the majority leadership in the legislature understands the gravity of the situation and works to get meaningful legislation passed next session," said Sen. Rita Days.
"These modern-day loan sharks have preyed on too many Missourians for too long," said Sen. Jeff Smith. "At a time when so many families are strapped for cash and facing foreclosure on their homes, it's unfortunate that the Blunt Administration has spent three years asleep at the wheel."
"We need to stand up for the citizens of Missouri by standing up to the payday loan industry," said Rep. Esther Haywood. "Each year Democrats in Jefferson City try to put forward legislation to fix this immoral system, but each year Matt Blunt and the Republican legislature prevent the bills from coming to a vote. That needs to stop. It's time for Blunt and his allies in the legislature to show some leadership and join us on this critical issue."
Attorney General Nixon, the legislators and faith leaders pledged to strongly support legislation to cap payday loan interest rates at 36 percent and eliminate the harmful practice of renewing loans -- a practice prohibited by every bordering state. Renewable payday loans punish families unable to make payments by charging them astronomical interest rates to extend the period by which they can repay the loan.
The coalition of leaders also supports legislation to provide the Attorney General Office with the tools and authority to punish payday lenders who violate the law. Specifically, the Attorney General's Office must be granted jurisdiction by the legislature to issue cease and desist orders against violators. The Attorney General must also be granted authority to sue for injunctions, restitutions, rescission of loan contracts and civil penalties. Under current law, the Missouri Division of Finance regulates payday lenders and the Office of the Attorney General can only take action when cases are referred by that division.
"Families who are forced to take out payday loans certainly don't have the means to hire an attorney to protect their rights," said Attorney General Nixon. "The legislature needs to give the Office of the Attorney General the authority to punish payday lenders who take advantage of vulnerable Missourians and violate the law."
Attorney General Nixon, the legislators and faith leaders made their announcement at a press conference in front of a payday loan center on Kingshighway Blvd in St. Louis. In attendance at today's press conference: State Senators Rita Heard Days and Jeff Smith; State Representatives Esther Haywood, Juanita Head-Walton, Talibdin El-Amin, Robin Wright-Jones, Jamilah Nasheed; Alderman Sam Moore; Rev. Douglas Parham, Rev. Robert Franklin; Committeeman Joe Palm.