Council to discuss payday-loan moratorium

Saturday, October 31, 2009 | 12:01 a.m. CDT; updated 6:23 p.m. CST, Tuesday, November 3, 2009
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There are 21 businesses with payday-loan licenses in Columbia. Nine of these businesses are in the First Ward, eight are found in the Second Ward and two are in each of the Third and Sixth wards.

COLUMBIA — An ordinance that would impose a six-month moratorium on new payday-loan businesses is on the agenda for the Columbia City Council on Monday night.

Fourth Ward Councilman Jerry Wade said he introduced the idea after several constituents complained about the potential impact of payday-loan businesses in a financial crisis. Wade also said, however, that he has, "no preconceived agenda on what we should do." 

"I've had enough people ask me the question, and maybe we need to just stop a minute and take a look at them and see what we have and ask ourselves if there is anything we should do," Wade said.

City staff has assembled a report on the matter for the council. It said Columbia  has 21 state-licensed payday-loan businesses. It said the council also has other options, including zoning restrictions that would prevent payday lenders from clustering together and an ordinance that would limit the number of business licenses, based on population, that could be issued to such businesses.

If the City Council decides to explore whether zoning restrictions on payday-loan businesses are desirable, it would have to refer the matter to the Planning and Zoning Commission.

The city report also includes a January 2009 memo from Deputy Commissioner of Finance Richard Weaver to Gov. Jay Nixon and the Missouri General Assembly about a survey of payday lenders. Weaver wrote that the state issued 1,315 payday-loan licenses in 2008 and that the average loan was $290.29 with an average interest rate of 430.68 percent.

State Rep. Mary Still, D-Columbia, said that interest rate is too high.

"I think we need to have some reform in Missouri. We have an average interest rate of 430 percent, and Missouri also allows six loan renewals," Still said. "I feel like this results in the financially unsophisticated falling into a spiral of debt."

Still sponsored a bill during the last legislative session that aimed to limit the fees and interest that payday lenders could charge. It also would have prohibited repeated loan renewals that allow lenders to get around interest restrictions. Weaver's report shows that each of the states neighboring Missouri forbids loan renewals. It also shows that, other than Tennessee, Missouri has far more payday-loan businesses than any of its neighbors.

Still said her bill never came before the House for debate. It wasn't even assigned a hearing until the session's last day.

Still is holding a "district hearing" on Nov. 16 to learn more about the issue. She said she has a lot of questions about how payday loans operate, the best way to limit interest rates and how other states are dealing with the issue.

"It will be an opportunity to get good input so that maybe this year I'll have a hearing, and the speaker will assign me a time so I can get the information I need to work out a law we can live with in Missouri that would help protect poor, working people that often just get trapped," Still said. "These are people that work; they just don't have a lot of money, and sometimes do need an extension."

Still said the Catholic Conference and AARP are among the organizations that support her legislation and plan to be part of the meeting. Wade said he plans to attend as well.

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Teresa Ratcliff October 31, 2009 | 7:21 a.m.

Thank you, State Rep. Mary Still, for taking a look at this. I lived in Sumter, SC for several years where there are 210 listings in the local yellow pages for check and cash advance businesses. These businesses are nothing but a legal way to rob people. These people are just living paycheck to paycheck as it is, and when a bit of bad luck comes their way, these places look like a life saver to them. However, once they get into the snare, interest rates that should be illegal in the first place, plus administrative fees and late fees keep them ensnared. The fewer the better in my opinion, and any monitoring that the state could enforce would greatly benefit the "recipients" of these "services".

(Report Comment)
Andrew Arnold October 31, 2009 | 11:14 a.m.

The current law limits fees and interest to 75% of the face value of the loan. It also limits roll-over renewals to 6 times. When you apply an annual percentage rate (APR) analysis as Commissioer Weaver has, you get the rediculous 430% calculation, when if you apply the roll-over limitation in conjunction with the interest and fee percentage limitation you get a maximum of 75%... and that's if the loan gets rolled over for the max. Rep. Still is terribly mis-informed and continues to fiddle after issues that she can't do anything about while Columbia burns. She does the people needing a SHORT-TERM moeny-fix and her constituents a dis-service and should think twice about seeking an 2nd term.

(Report Comment)
DWIGHT MCQUADE October 31, 2009 | 12:31 p.m.

I just went to the Holiday Inn Conf Ctr in Columbia and asked for a room rate and they told me $36,500. dollars. I said I only want one nite and they said we have to quote the yearly rate. Payday loans are required to quote the yearly rate when the loans are only for a 2 week period. Some how it does't make sence!

(Report Comment)
Tim Sullivan October 31, 2009 | 1:31 p.m.

Mr. Arnold,

I could not disagree with you more regarding payday "businesses". They are nothing more than legal loan-sharking and they provide absolutely no service to their "customers". Borrowing money at 430% is not a short-term fix for anyone. I would challenge you to do further research on these companies. Many states have done the appropriate thing by effectively banning these companies - Georgia probably having the most stringent anti-payday loan laws. Our federal govt. - under Republican leadership - realized how these companies were preying on the men and women serving our country and limited the loans to all active military to 36% APR shutting down most of the payday loan businesses that thrived just outside of many military bases. This is a bipartisan issue. As a capitalist myself, this is one area where the free-market is not the best solution. These businesses need to go!

Mr. McQuade,

Your comment makes no sense. You don't go to Holiday Inn to borrow money - you go to a bank. They are quoting prices based on excepted financial standards at your bank or credit union, not Holiday Inn.

(Report Comment)
Elise Hammond October 31, 2009 | 1:40 p.m.

I am glad that Rep. Still is pushing the issue of pay day loan reform in Missouri. Our state has among the least restrictions on payday loans and policy change is necessary because the lending practices of payday loan companies are predatory. I wrote a well-researched paper on this issue for a public-policy class while I was interning for the Missouri House of Representatives. If you are interested in the issue check out

(Report Comment)
Ray Shapiro October 31, 2009 | 1:48 p.m.

Unsecured lending is a slippery slope.
If small emergency loans can not be administered by a United Way agency, such as Voluntary Action Center, then the poor will be easy customers for irresponsible borrowing.
These borrowers offer no collateral.
Maybe religious organizations should be coordinating giving out small emergency loans.
Borrowers can leave their children as collateral, to be returned upon compliance.

(Report Comment)
John Schultz October 31, 2009 | 8:18 p.m.

I find it odd that Rep. Still "has a lot of questions about how payday loans operate" (the Missourian's wording, not an exact quote), but still felt the need to file a bill further regulating the industry.

I have no need or desire to visit a payday loan company, but if someone needs a quick bit of cash to ease a tight situation and they understand the loan they are getting, I say leave the industry alone. Better that people pay a little bit of interest than not have the power on, especially if they don't have a cash cushion, credit card, or ability to get a "regular" loan:

(Report Comment)
Allan Sharrock October 31, 2009 | 10:04 p.m.

John, Mary like most libs wants to control your every move from cradle to grave. The 430% would be called calculator abuse by the white house. lol

I know there was a big stink about too many of these pay day loans close to military bases and GI's were going there for money. So of course everyone thinks that if you limit how close they are to base you would somehow stop troops from getting loans. They obviously don't know privates very well. The only thing they are doing is driving up the taxi cab fare because privates when they get time off WILL spend money. The better solution is to have private organizations offer free financial advice to people. They would gladly do it as some kind of tax write off for a charitable event or as a chance to advertise their investment options.

(Report Comment)
jane whitesides November 2, 2009 | 1:27 p.m.

Mr. Arnold, aren't you a lobbyist for QC Holding and QC Financial? Aren't some of these lenders your clients? The disclosure of your interests would allow readers to assess your information fairly.
Jane Whitesides
Missouri Progressive Vote Coalition

(Report Comment)
Allan Sharrock November 2, 2009 | 3:27 p.m.

Jane you have commented before on the Missourian. Shouldn't you have posted the Missouri Progressive Vote Coalition on all your posts? I mean you are representing a group with a agenda, like Mr. Arnolds. So unless you just recently joined I think the term hypocrite comes to mind.

(Report Comment)
Katherine Richards April 13, 2011 | 7:43 a.m.

Well, payday loans really need regulation, however, the lawmakers shouldn't forget that the regulation need to be reasonable in order not to lead to the worse effects, like in Illinois where the payday lender closed the stores considering the measures to be too strict. The new laws just make the business less profitable and people lose their jobs. It is very important to keep the laws clear and appropriate for the both sides in order to protect common people who can lose the only source of income.

(Report Comment)

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