By Bobby Harrison/NEMS Daily Journal
JACKSON – People who borrow money from payday lenders would have 30 days instead of 14 to pay off their loans under legislation that passed the House Banking and Financial Services Committee on Tuesday.
Committee Chair George Flaggs, D-Vicksburg, proposed the legislation that he said tried to answer concerns expressed by both sides – consumer advocates who say the payday lenders prey on the poor, and payday lenders who say too much additional regulation would put them out of business and cost the state more than 3,000 jobs.
Flaggs said he believes the legislation is a good compromise.
According to Flaggs, calculating the annual percentage interest rate over 30 days instead of 14 days would decrease it from 574 percent to 268 percent, which would put Mississippi more in line with what is charged in other states.
The bill now goes to the full House for consideration. If it passes there, it goes to the state Senate.
Some argue for the expiration of the law that allows payday lenders to charge more than the 36 percent allowed for other financial service providers. But others say that if the law expires, lower-income people would have no place to turn to get financial help with emergencies.
The Flaggs bill would clarify that payday lenders could charge $21.95 for each $100 loaned. The maximum amount of the loan, including the fee, would be $500 instead of the current $400.
The bill also would take 20 cents from each $21.95 to be used to provide education services to consumers of payday lenders and for enforcement of the regulations on payday lenders.
Ed Sivak, of the Mississippi Economic Policy Center, termed the proposal “a step in the right direction, but still a lot of work needs to be done.”
He said consumer groups should have an equal voice with the industry in putting in place the educational material.
Contact Bobby Harrison at (601) 353-3119 or firstname.lastname@example.org