Missouri Debates Payday Loan Legislation

By: Javi Calderon
Missouri Debates Payday Loan Legislation

The House Financial Institutions Committee of Missouri heard proposals for two different bills designed to tweak how payday loan lenders operate within the state.

Representative Mary Sill, a Democrat from Columbia, saw her bill face opposition from committee members.

The other bill, presented by Sikeston Republican representative Ellen Brandom, came in with support from the payday loan industry and was designed by a group of lawmakers tasked by House Speaker Steve Tilley with the job of considering changes to the state’s payday advance laws.

The hearing lasted two hours as supporters and opponents of each bill stated their cases.

An interesting and unconventional twist, Representative Don Wells used to be the owner of a cash advance store, but sold it a year ago. He assured his colleagues that he had no conflict of interest in the matter.

Wells also stated that he would not be hard pressed to show support for Sill’s measure, insisting that it would result in putting loan lenders out of business.

Sills bill would cap the interest rate on short-term loans at 36%, allowing for a five percent fee on top of the interest rate. The bill would also require consumers to wait two weeks between payment of a loan and taking out a new one.

Sill cites the strong Payday loan lobby in the states and their lucrative campaign donations for the Committee’s lack of support for her bill.

Brandam believes her bill is a fair compromise, designed to protect consumers without hindering the loan industry. Her bill would lower the maximum allowed APR by almost 25%. It would also limit the amount of payday loans renewals a customer can obtain at three, instead of six.

Randy Scherr, an industry lobbyist, believes that studies show that loan consumers are happy with the product they are receiving and know full-well the stipulations they are agreeing to.

The House Financial Institutions Committee did not vote on the bills and it is yet unknown when or even if they will.