House approves compromise that extends payday lending

By Bobby Harrison/Daily Journal Jackson Bureau

JACKSON – The Mississippi House on Monday passed a compromise measure that would extend the controversial payday lending industry in the state to July 2015.
Without legislation, the industry will cease to exist in July 2012.
Various consumer advocates and religious groups had opposed the extension of the industry without more safeguards to protect borrowers. The House approved the compromise by a 76-43 margin – four more than needed for passage – after more than 90 minutes of often heated debate.
The compromise was reached last week by House and Senate leaders and requires approval of each chamber. Senate Banking Chair Gary Jackson, R-French Camp, said Monday he is not sure when he will take up the proposal.
Banking Chair George Flaggs, D-Vicksburg, the lead House negotiator, said the compromise provides more protection for consumers while keeping an industry in operation that provides a service for low-income people in emergencies and employs more than 3,000 Mississippians.
The bill was held on a motion to reconsider, meaning that opponents could still garner enough votes to kill it.
Rep. Bobby Moak, D-Bogue Chitto, said that while he would have liked more consumer protection, the bill was an improvement he could support.
He said payday lenders “help people get over the hump, from one week to the next, from one payday to the next.”
Opponents said that even under the compromise, borrowers will be charged large fees that could put them in a cycle of debt that would force them to take out multiple loans.
Rep. John Mayo, D-Clarksdale, drew the ire of some black House members when he compared the cycle of debt to slavery. Still, a majority of the chambers’ 38 black members joined Mayo in voting against the bill. Only three of the chambers’ 53 Republicans voted against the compromise.
Under current law, payday lenders can charge $21.95 for each $100 loaned and loans are capped at $400, including the fee. In most cases, loans must be repaid in 14 days, making the annual rate 574 percent, which is the highest in the nation.
The compromise would allow payday lenders to charge $20 on each $100 on loans of up to $250. For $250 to the maximum of $500, they could charge $21.95 per $100 loaned.
Borrowers would have 14, 21 or 30 days to pay back loans of $250 and less and 28 to 31 days on loans of more than $250.
According to the Mississippi Economic Policy Center data, under the compromise payday borrowers in Mississippi still pay more for a loan than do borrowers in most surrounding states.
Religious groups have urged the Legislature to defeat any attempts to pass a payday lending bill this year, saying it could be done next year with the goal of getting better rates and safeguards for consumers.
Contact Bobby Harrison at (601) 353-3119 or

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