Editorial: Failure of Payday Loan Reform Measure Bad for Missouri

St. Louis Post-Dispatch, September 6, 2012

Robbery with a pen will continue to be legal in Missouri with the announcement Monday that Missourians for Responsible Lending had abandoned its campaign to cap payday loan interest rates in the face of well-financed opposition from the industry.

What this means is that instead of capping the interest rates and fees for payday loans at a relatively reasonable 36 percent, they will continue to soar to their average rate of 445 percent annually.

What this also means is that deep-pocketed, out-of-state loan sharks playing a shell game with campaign finance won. Poor people lost.

The grass-roots petition supporters could have benefited from a payday loan to their campaign, but they wouldn’t have been able to handle the usurious interest rates and fees any better than the poor and working-class people who get the predatory loans.

The decision to suspend efforts to get initiatives on the state’s Nov. 6 ballot to cap the payday loans and to raise the state’s minimum wage has a wider impact than on just payday borrowers and underpaid workers. It also means that the ballot initiative — one of the last methods left for groups of average citizens to try to change the law — is endangered.

“This is a real challenge to participatory democracy,” the Rev. David Gerth, head of Metropolitan Congregations United, which worked on behalf of the two ballot initiatives, said Tuesday. “I wouldn’t say it’s impossible to get an initiative on the ballot, but it is very, very difficult to win.”

The organization fighting the payday loan industry, and Give Missourians a Raise, the group seeking to raise the minimum wage, had combined efforts. Each initiative needed about 95,000 signatures from across the state, and the groups submitted petitions with more than 350,000 signatures.

Various election authorities, including in the city of St. Louis, had questioned the validity of enough signatures to keep the initiatives off the ballot. Supporters thought they could challenge those ballot counts and get the signatures approved by the Sept. 21 deadline.

They said Monday that their well-heeled opponents had put too many legal hurdles in their way to overcome by the deadline.

“Since beginning this campaign more than a year ago, we have faced an opposition unrestrained by money, morality, truth or concern for the economic dignity of our neighbors and family members,” said the Rev. James Bryan, treasurer for the lending cap group.

Here’s all Missourians need to know about that process:

The payday loan industry spent more than $2 million fighting to keep this common sense measure off the ballot, knowing full well that if it made it there, it would pass. Nearly all of that money was funneled through a Kansas City non-profit that, to date, hasn’t revealed its donors.

What are they afraid of?

Supporters of the initiatives, meanwhile, spent $600,000, all of it accounted for, according to Missouri Ethics Commission reports.

Supporters put their names on the line. Opponents didn’t.

That Missouri law allows this is as unjust as charging poor people more than 1,000 percent interest on loans they’ll never be able to pay back.

Rev. Gerth said petition supporters had done their best to keep costs down, getting help from churches and synagogues across the state and using hundreds of locally trained volunteers to collect signatures, but they just didn’t have the money to keep fighting.

Of the 143 ballot initiatives submitted to the secretary of state this year, four have been certified for the Nov. 6 ballot. Two were referred by the Legislature, one was largely funded by the American Cancer Society and a coalition of health-care and education interests, and the last, on local control of the St. Louis Metropolitan Police Department, was largely funded by millionaire investor Rex Sinquefield.

State lawmakers need to do two things to make it easier for ordinary citizens to have a say in government. First, make it illegal for wealthy donors to hide behind layers of secrecy. If money is free speech, and corporations are people, then make the corporations put their names on their speech.

Second, pass a version of the bill that was supported last session by state Auditor Tom Schweich, a Republican, and Secretary of State Robin Carnahan, a Democrat, that would have added an extra step to the initiative process. Modeled after an Oregon law, it would require 1,000 sponsoring petition signatures to weed out those who aren’t serious about the process.

Those who want payday loan companies to stop preying on Missouri’s poor say they’ll get back to work passing a new law that merely would put the Show-Me State in line with most other states, with the same sort of interest limits Congress imposed on payday loan companies that were taking advantage of military families.

Missouri lawmakers should back their efforts by evening the playing field.

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