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House passes bill creating new payday lender loans


The Arizona House of Representatives narrowly approved a proposal Monday allowing payday lenders barred from operating following a 2008 voter initiative to offer a new high-interest loan product.

The 31-26 vote on Senate Bill 1316 came after opponents made passionate efforts to persuade enough Republicans to oppose the bill to defeat it. If also approved by the Senate and signed by Gov. Doug Ducey, the legislation will allow lenders to offer products with interest rates of about 200 percent a year. It’s a rejiggered version of a bill that failed last year.

The proposal by Sen. John Kavanagh and backed by Rep. J.D. Mesnard, both Republicans, allow so-called “flex loans” at 15 to 17 percent interest per month without requiring collateral. That means someone taking out a $2,500 loan and paying it back over two years will pay $10,000.

It is a rejiggered version of a bill that failed last year and passed by a single vote on Monday. The new “flex loans” are unsecured by auto titles or other collateral and carry an interest rate of about 200 percent a year.

Democrats fiercely oppose the legislation giving what they call predatory lenders the green light to return to Arizona. Voters soundly rejected an initiative in 2008 that would have allowed the payday lenders who charged 400 percent yearly interest for non-secured loans to stay open permanently. When their temporary authorization expired in 2010, they closed.

A handful of Republicans also opposed the measure Monday, including Rep. Brenda Barton, R-Payson. She noted that backers said there were no alternative for people with no credit, but she pointed out that credit unions offer their members so-called “payday alternative” loans with interest rates below 15 percent a year.

“This has been pushed hard, folks, and I know that, but this part type of legislation is not needed in Arizona,” Barton said. “There are alternatives and the interest rates are much lower.”

Republicans who backed the measure said there was no viable alternative for the working poor without credit.

“You say all these alternatives exist — they don’t, they don’t,” said Rep. Jay Lawrence, R-Scottsdale. “They want a credit report, they won’t provide the money immediately. That little person sitting there with the illness needs the money then.”

The key Democratic opponent was Rep. Debbie McCune Davis of Phoenix, who battled against the bill last year and worked to defeat it again this session. Before the voting began, she noted that payday lenders had flooded the state with campaign contributions and warned lawmakers of laws against unduly influencing lawmakers.

“There are stories circulating of offers being made in exchange for votes,” she noted before reading the applicable statutes.

Lawmakers were deluged with thousands of letters from consumers who backed the bill, but Democrats and even some Republican supporters doubted they were actually authentic.

“I’m concerned about the glitz and glitter of any sales campaign,” Rep. Rusty Bowers, R-Mesa, said during a rambling speech that focused on his personal views on debt. “But I haven’t heard one person stand and decry the $59,509 that every man, woman and child carries as part of our national debt. I vote aye to give another option.


  1. Legislator’s, led by the repressive/regressive John Kavanaugh (‘never let a Lobbyist with cash get away’),
    once again stick it to the poor and needy. Give the Governor and majority GOP Legislature credit, they are consistent in helping Special Interests, bible humpers (churches), and friends they didn’t know they had.

  2. “Not a penny in higher minimum wages for the poor,” say our Republican governor and legislators, “but let’s let the loansharks take the little they earn.” What strange moral principles govern these predatory beasts?

    Your illustration above should have included handcuffs of filthy lucre being put on the poor slug receiving a 200%+ loan, handcuffs attached to the loansharks lender, with the key locking them together — forever — being turned by a legislator, any legislator so long as he or she is a Republican. What shills for vultures, like carrion themselves.

  3. This amendment may not be ideal to all people by any means, but it is something. If the Democrats are opposed to it, they need to present an alternative. I’m reminded of the Obamacare days, only then it was the Republicans opposing reform and presenting zero constructive alternatives. Looks like the shoe is on the other foot and it’s the Democrats stonewalling reform here with small lending.

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