Payday lending bill sent to governor

By Bobby Harrison/NEMS Daily Journal

JACKSON – The Senate voted quickly Wednesday to send to the governor a bill that would extend the life of the payday lending industry in Mississippi.
The bill was explained and debated for about 10 minutes before it was passed on a voice vote. Eight senators in the 52-member chamber opposed it.
The Senate action was in sharp contrast to Monday’s vote in the House, where debate lasted more than an hour and at times was heated.
A senator could use parliamentary rules to demand another vote on the bill. But based on the strength of Wednesday’s vote, that likely will not occur, meaning the bill will go to Gov. Haley Barbour’s desk.
Laura Hipp, a spokeswoman for Barbour, said the governor would withhold judgment on the bill until he had time to study it.
Sen. Walter Michel, R-Jackson, said the bill “will be even better for Mississippians because it reduces the rates.”
Michel was referring to the annual percentage rate, which under the current law is 572 percent and one of the highest in the nation. The Daily Journal has previously reported a different APR based on information provided to the Senate Banking Committee.
Under the legislation passed Wednesday, that APR could be cut in half. Still, Sen. David Jordan, D-Greenwood, asked why the Legislature should allow such a high rate “in a poor state with the poorest of the poor.”
Michel said to qualify for a payday loan, a person had to have a job and a checking account. Some religious groups and consumer advocates had lobbied to prevent passage of any bill dealing with the payday issue until next session, hoping to build support for more safeguards for borrowers, such as a data-base system.
But it became apparent after the House passed the bill that the advocates did not have the votes to slow down the process.
Without legislation being signed either this year or next, the payday lending industry will cease to exist in the state July 1, 2012. Under the current bill, the industry gets an extension to 2015.
Senate Banking Chairman Gary Jackson, R-French Camp, said under the bill a person would not be required to repay a loan taken out from a company not licensed in the state, such as an Internet business.
Under legislation passed Wednesday, payday lenders could 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 loan.
Borrowers would have 14, 21 or 30 days to pay back loans of $250 and less, and 28 to 31 days to pay back loans of more than $250.
Under the current law, the charge is $21.95 per $100 and in most cases the borrowers have 14 days to repay the loans.
The legislation also would require payday lenders to provide borrowers a pamphlet educating them on the payday loans and will be provided the phone number for the Department of Banking and the attorney general’s office to report any problems.
The only two Northeast Mississippi senators to vote no were Bill Stone, D-Ashland; and Bennie Turner, D-West Point.

Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@journalinc.com.