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Bill to cap payday loans draws big crowd

Feb, 2009

HELENA - Critics on Monday accused Montana’s payday lending businesses of preying on often-unsophisticated, desperate, poor people with excessive borrowing fees and backed a bill to cap the their interest rates at an annual percentage rate at 36 percent.

“This industry thrives upon the victimization of vulnerable repeat customers,” the bill’s sponsor, Rep. Bill Wilson, D-Great Falls, told the House Business and Labor Committee. “The rates these lenders charge are inconsistent and amount to nothing less than legal loan sharking.”

The payday and title lending businesses “created new jobs in Montana, but at great costs,” said Linda Reed, president and chief executive officer of the Montana Community Foundation and a retired bank president. “It’s on the backs of our most vulnerable citizens.”

But payday lending business owners countered they immediately would be forced to shut down if Wilson’s House Bill 396 passed, leaving 500-600 employees jobless.

They portrayed themselves as the lenders of last resort for people with jobs who face unexpected financial problems and need to borrow a couple of hundred dollars. They argued their rates are no higher than than bank fees, checking overdraft fees or late credit card fees.

“Our clients made good competent decisions about their personal finances,” said Bernie Harrington of the Montana Financial Services Centers and who owns six businesses.

The hearing attracted a big crowd, with 22 people testify for the bill, while 14 spoke against it.

The committee did not vote on the bill Monday.

Source :: Missoulian.com