By Bobby Harrison/NEMS Daily Journal
JACKSON – Legislation to ensure that payday lenders continue to operate in Mississippi passed the state House by a 78-38 vote Tuesday.
But the legislation will give those who receive the small loans more time to pay them off, resulting in reducing the annual percentage interest rate, which critics say is currently at 547 percent.
Other financial service companies, such as banks, can charge no more than 36 percent, though payday lenders point out that when a person writes a check with insufficient funds, the cost can be much greater.
Opponents of the payday loan companies tried to block any legislation from passing the House. Unless the payday lending industry is reauthorized by the Legislature this year or next year, it will cease to exist in Mississippi on July 1, 2012.
Some legislators said that is what should happen.
Rep. John Mayo, D-Clarksdale, said “the state should not go to the extreme of letting people make an ungodly amount of profit on the backs of poor people.”
Others, such as Rep. Bob Evans, D-Monticello, asked what would Jesus do before reading numerous Bible scriptures that warned people not to charge interest to the poor.
Rep. George Flaggs, D-Vicksburg, said the industry provides a service, making quick loans to those in an emergency situation.
Plus, Flaggs said, he could not justify shutting down an industry that employs more than 3,000 people at a time when the state has an unemployment rate of more than 9 percent.
“People may need a quick way to get $200 to stop an electric bill or to buy medicine,” he said.
But those who oppose the industry say the payday lenders get people in a vicious cycle of rolling over their loans into bigger amounts, putting the people in deeper and deeper holes. That practice is supposed to be illegal, but many legislators said it occurs.
Many in the religious community have voiced their opposition to payday lenders, including Mississippi Southern Baptist, United Methodist, Catholic and Episcopal leaders.
Current law allows a person to obtain a loan of up to $400 and have up to 14 days to pay it off. The $400 would include the maximum fee of $21.95 per $100 loaned.
Under the bill that passed the House, for a loan of less than $200, a person would have 21 days to pay it off while for up to $500 – the maximum loan amount – a person would have up to 30 days.
For less than $200, the fee on the loan would be $20 per $100. For $300 to $500, the fee on the loan would be $21.95 per $100.
The bill now goes to the Senate.
Contact Bobby Harrison at (601) 353-3119 or email@example.com.
How they voted
- Votes of Northeast Mississippi House members on a bill to reauthorize payday lenders and increase the time borrowers have to repay loans:
FOR – Noal Akins, R-Oxford; Jim Beckett, R-Bruce; Donnie Bell, D-Fulton; Sid Bondurant,
R-Grenada; Bubba Carpenter, R-Burnsville; Gary Chism, R-Columbus; Mark DuVall, D-Mantachie; Jack Gadd, D-Hickory Flat; David Gibbs, D-West Point; Mac Huddleston, R-Pontotoc; Warner
McBride, D-Courtland; Billy McCoy, D-Rienzi;
Dannie Reed, R-Ackerman; Tommy Reynolds,
D-Water Valley, Margaret Ellis Rogers, D-New
Albany; Preston Sullivan, D-Okolona; Jerry Turner, R-Baldwyn; Greg Ward, D-Ripley; Tommy Woods, R-Byhalia.
AGAINST – Kelvin Buck, D-Holly Springs; Tyrone Ellis, D-Starkville; Steve Holland, D Plantersville; Harvey Moss, D-Corinth; Jimmy