Predatory Payday Lenders Lose Another Round

Posted by AzBlueMeanie:

Former predatory payday lender lobbyist Jonathan Paton must be heartbroken. The predatory lender industry he helped to inflict upon the state of Arizona lost another round in the Arizona Legislature and is one step closer to being shut down on July 1. Payday industry loses in key vote:

On a 5-3 vote late Tuesday, the Senate Appropriations Committee killed an industry-sponsored measure to continue their exemption from state laws limiting loan interest to no more than 36 percent a year.

The exemption, approved by the Legislature a decade ago, expires June 30. In 2008 Arizona voters came down 3-2 against a proposal that would have extended the exemption, despite a $14 million industry campaign to let them keep operating.

And without the exemption, the fees those lenders now charge, which compute to more than 400 percent on an annual basis, will become illegal.

Industry lobbyist Stan Barnes said he doubts there is any way to resurrect the issue before the deadline.

Submitting a statement at yesterday's hearing was former assistant Arizona Attorney General Vince Rabago who prosecuted a fraud case against out-of-state payday lender QuickCash in 2009 for deceptive debt collection practices. Rabago's statement:

“The voters have clearly spoken, rejecting this form of predatory lending.  Payday loans are bad for people and bad for Arizona. Payday loans institutionalize, through government protectionism, predatory lending, the ability to borrow irresponsibly, and outrageous and immoral interest rates. This results in a crushing debt trap.

The argument that payday loans must continue to exist, as a necessary evil, must be rejected. In reality, the vast majority of desperate borrowers use payday loans without exhausting alternative resources. Nationally, there are more payday loan stores than Starbucks and McDonalds combined. I urge you to respect the will of Arizona voters and reject this bill, and say NO to payday loans.”

Prior to yesterday's committee hearing, the Arizona Democratic Party issued this press release:

STATE CAPITOL – Today, the state Senate is hearing a proposal to allow payday loans to stay in Arizona. Republican congressional candidate Jonathan Paton managed to escape the Legislature in time to avoid a vote on this issue, but he can't escape his past as a spokesman for the payday loan industry. Paton should state whether he supports overturning the will of the voters on payday loans.

"Paton has been talking up his record, but he skips over his work for the payday loan industry during his years as a lobbyist," said Don Bivens, Arizona Democratic Party chairman. "He owes it to southern Arizonans to disclose his strong ties to payday lenders."

The payday lending industry's ballot initiative, Prop. 200, was soundly defeated in 2008. In fact, voters shot it down by a nearly 2 to 1 margin despite the industry outspending the opposition $14 million to only $300,000. The initiative would have made permanent their ability to charge 390 percent interest rates and trap consumers in cycles of debt.

As a payday loan spokesperson in previous years, Paton was paid to defend those predatory practices. He did so in a front-page Tucson Citizen story that described how elderly Tucson residents were being preyed upon by payday lenders. An excerpt:

But Jonathan Paton, the southern Arizona spokesman for the Community Financial Services Association, a payday lending industry group, said his members strictly adhere to state lending laws. He also said it is impossible for lenders to be selective when it comes to a customer's age.

"What are we supposed to do, tell people: 'We can't give you a loan because you're too old?'" he asked.

Source: Tucson Citizen, Jan. 22, 2004, page 1A

"Paton has been pushing a carefully crafted image, so it's not surprising he downplays his years as a lobbyist," Bivens said. "But now that his old payday loan associates are back again, trying to overturn the will of the voters, it's time for Paton to make clear his past relationship with payday lenders and to tell Arizona voters where he stands on the issue."

By the way, some of the most vocal opponents of predatory payday lenders are base commanders who object to members of the U.S. military and their families being preyed upon by these predatory payday lenders. Paton should answer for this as well.