Monday, January 22, 2007

Saying their industry takes advantage of the poor and the vulnerable, Attorney General Paul Morrison promised Friday to push for new restrictions on payday loan companies.

Morrison announced that he’ll convene a daylong “round-table discussion” on payday loans and check-cashing businesses, with an eye toward lower limits on what they’re allowed to charge consumers who take out small, short-term cash advances.

To lead the discussion, he appointed Holly Petraeus, the wife of Fort Leavenworth’s commanding lieutenant general, who led a push for restrictions on payday lending to soldiers. Morrison said he hopes to have proposals for the Legislature to consider before it adjourns in late April or early May.

“We think we know the direction that we need to head, and we’re just going to get these heads together, people who know about a lot about this issue, to make some recommendations,” Morrison said during a news conference.

Whitney Damron, lobbyist for the Kansas Payday Loan Association, said he wasn’t aware of any problems within the state and that no fax cash loan rates charged by its companies typically are lower than those in surrounding states.

“A payday loan is a straightforward loan that the consumer understands,” Damron said. “You find few complaints to the state banking board.”

State law limits payday loan companies to charging a 15 percent fee. However, typical payday advances - between $100 and $500 - last only two weeks, making the actual annual percentage rate charged up to 400 percent.

Morrison said borrowers often have trouble paying back their loans quickly, and they keep rolling them over - and often take out new loans.

“Kansas is literally becoming a mecca for a lot of these businesses, because it’s easy money,” Morrison said. “They’re popping up everywhere.”

This entry was posted on Monday, January 22nd, 2007 at 6:25 am and is filed under Kansas.