End of Arizona Payday Loans Looms
By June 30 Arizona could be joining states banning or restricting payday loan operations with credit unions playing a role in joining the cause.
Among CU sources, the forecast is that the state legislature will abide by a 2008 antipayday referendum and shelve a bill still circulating in the House and Senate to overturn a sunset statute enabling payday firms to continue offering the controversial high-rate products.
"It's never over until the legislature adjourns and that might not be until May, but many people are now saying the firms will be out of the lending business and converting their outlets to pawn shops, check cashers, auto title and whatever else they can come up with," said Austin DeBey, vice president of governmental affairs for the Arizona Credit Union League.
The league, joined by the North Carolina-based Center for Responsible Lending, AARP, consumer groups and others, said a last-ditch try by payday proponents went down to defeat April 7 after a state Senate panel declined to revive a bill overriding the sunset law.
The payday proponents, led by large national firms that control many of the state's 650 shops, maintain the high-rate offerings should remain as a consumer choice. In addition, they contend the local market has shown a need for short-term, emergency loans that are not available from banks or CUs.
In trying to win lawmaker support, the payday proponents also offered to set up foundations to provide grants to consumer groups as well as special free counseling services to debtors.
"Defeat of the bill is a victory for consumers," said DeBey. If the sunset provision holds, Arizona would join North Carolina and Ohio, which have recently singled out payday shops for a clampdown.