Wednesday, February 21, 2007

Vicky Greathouse needed cash when her mother-in-law passed away, but she said her longtime bank turned her away. The Glendale woman found help at a quick payday advance store.

Last week, Greathouse testified at the state Capitol in defense of the much-criticized quick-cash stores, saying they serve a purpose.

“People need a choice and a place to go in case something comes up and they need to make it from one payday to the next,” Greathouse said.
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The no fax needed payday loan stores, allowed to open in Arizona in 2000, have multiplied in seven years. Glendale has about 40 outlets, most in the southern part of the city.

The stores offer quick cash for those in tight spots, but that comes with high interest rates.

“In our day, we called them loan sharks,” said Ricki Ray, a Glendale resident who is the president of her neighborhood association near 43rd and Glendale avenues.

Ray said the stores destabilize neighborhoods.

The Glendale City Council in October did what it could to curb the bad credit cash loan industry, prohibiting the stores from opening within a quarter-mile of one another. Mayor Elaine Scruggs called on the state Legislature to do more.

Lawmakers, including Rep. Chad Campbell, a Democrat whose district includes a sliver of southern Glendale, have introduced a handful of bills this session to regulate the industry by lowering interest rates and reducing the number of times an individual can roll over personal loans, delaying payment but accruing higher fees.

The bill that appeared to have the most momentum was House Bill 2224, pushed by Rep. Marian McClure, R-Tucson.

But McClure’s bill failed in committee Feb. 12.

The proposal would have required that people taking a loan be entered into a database and tracked so that they could not obtain another quick loan, spiraling into a cycle of high-interest debt.

State law already prohibits multiple Arizona payday loans, but there are no teeth for enforcement. McClure argues that a tracking system is necessary for any reform to take root.

But some lawmakers and industry lobbyists balked at the government tracking.

Although some have said they felt taken advantage of by the system, Valley resident Patty Rogers told lawmakers she has worked for such stores and borrowed instant payday loans herself and was treated with respect.

“I’m missing why we’re trying to protect people from themselves in this industry and not others,” said Rep. Eddie Farnsworth, R-Gilbert, as he referred to credit card companies and interest-only mortgages.

McClure, who was angry that the bill was killed by fellow Republicans, said last Tuesday that she would regroup with the potential to still get a reform measure passed this session.

Some are not convinced the industry of payday advances can be reformed.

Kelly Griffith with the Southwest Center for Economic Integrity in Tucson said states that try to regulate payday loans have not succeeded because the businesses are designed to keep borrowers in debt.

The legislation that allowed the stores to open in Arizona is scheduled to expire in 2010. Griffith sees that as the best solution to the problem.

McClure said the alternatives to payday loans are not palatable, including Internet lenders offering loans at even higher rates than the local stores.

“I would rather have a storefront we could regulate and watch,” she said.

SOURCE: Arizona Central

This entry was posted on Wednesday, February 21st, 2007 at 7:13 am and is filed under Arizona.