The following article appeared in the Kansas City Star.
AS I SEE IT: Predatory lending is a plague
By JAY NIXON
I commend Kansas City’s efforts to protect its citizens from predatory lenders. And I disagree with the payday loan industry’s claim (As I See It, 8/30/07) that it is “helping” Missouri consumers.
By every measure, the payday loan industry is thriving at the expense of cash-strapped Missourians who have been caught in their debt trap.
Consider these facts:
•Missouri law allows the payday loan industry to charge up to 1,950 percent APR.
•There were $2.87 million in payday loans issued in Missouri in the one-year period that ended last Sept. 30, at an average APR of 422 percent.
•The Missouri Division of Finance issued 1,545 new payday loan licenses in 2006, an increase of 69 percent since 2003.
•Missouri allows payday loans to be renewed up to six times (while our neighboring states forbid renewals), meaning Missourians paid $317 million in renewal and late fees, second in actual dollars only to the state of California.
The results have been devastating to many families, leading to loss of homes and cars, and putting struggling working families further into debt.
These consumers quickly learn that our weak payday loan laws in Missouri do nothing to protect them from spiraling debt.
It is time for Missourians to stand up to this industry that has made a fortune off the misfortune of others.
Churches and nonprofit agencies that assist families in Kansas City and elsewhere in the state have seen the devastating effects the payday loan industry is having on working Missourians, and have joined with me in calling for stronger laws.
Even Congress recently took action to protect military families from these same predatory lenders that have mushroomed around military posts, just as they have in strip malls and in many depressed areas of our state.
For the past five years, I have called on the Missouri General Assembly to change our laws to provide protections to all our citizens by limiting interest rates to 36 percent, by eliminating the practice of renewing loans, and by providing tools to punish those who violate these laws.
I will renew my efforts in the 2008 legislative session. In the meantime, I encourage Kansas City to do what the General Assembly has failed to do — stand up for our citizens by standing up to the payday loan industry.
Jay Nixon is the attorney general of Missouri. He lives in Jefferson City.
