Petition to Cap Payday Loans Circulating in Missouri

By: Javi Calderon
Petition to Cap Payday Loans Circulating in Missouri

Annoyed by the inactivity of local government, a Missouri coalition has taken action by earning approval from Missouri Secretary of State, Robin Carnahan, to circulate a petition for capping the interest rates on payday loans, car title loans and other forms of short-term credit at 36%.

In order for the issue to make it on the November 2012 ballot over 90,000 signatures must be collected. The decision of whether or not to place a cap on cash advance loans would then be left up to voters.

In recent sessions several attempts at payday loan regulation have been made. Representative Mary Still has offered several proposals that have been met with resistance from Republicans. Still’s proposals have been similar to the language in the petition.

Republican Representative Ellen Brandom has offered a bit of a compromise, a proposal that would restrict some aspects of payday lending, but would not place a cap on the interest rate.

The coalition, titled Missourians for Responsible Lending, is led by Reverend Jim Bryan, who is joined in the initiative by over 60 local religious leaders.

Gerri Guzman, the executive director of the non-profit Consumer Rights Coalition, is not among the coalition’s supports, claiming that the plan is ill advised and could end up causing more harm than good by restricting the options for low-income citizens.

Guzman’s group plans to meet with over 10,000 Missourians to educate, gauge their opinions, and formulate a plan for how to approach the petition.

The State of Missouri accounts for more short-term loan transactions than other states. Missouri also has among the highest average interest rates in the country. 17 states across the country have adopted the 36% interest rate cap on short-term loans. The 36% cap was first applied by the Federal Government to loans extended to members of the military. Ironically, the cap for the military was suggested by two Missourians.