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UPDATE: City Council to gather information on payday loan businesses

Wednesday, November 4, 2009 | 12:01 a.m. CST

COLUMBIA — Now that a six-month moratorium on new payday loan businesses has been imposed by the Columbia City Council, the next step is figuring out where to go from here.

The council passed an ordinance imposing the moratorium early Tuesday morning during a marathon meeting. The ordinance, which was introduced by Fourth Ward Councilman Jerry Wade, passed on a 5-2 vote.

Third Ward Councilman Karl Skala said the council now will ask for additional staff reports, specifically on how other communities are handling payday loan businesses.

"I think what the whole moratorium is really is just a period of time for information-gathering and some evaluation," Skala said, who favored the ordinance. "We need to determine whether it is justified for any additional regulation and what that might be."

Skala said he would begin the learning process by having a "chat" Thursday with Julie Townsend, Missouri director of Advance America. Townsend spoke at the council meeting on behalf of Advance America, which has two of Columbia's 21 payday loan businesses.

Wade told the council Tuesday that the moratorium should be a time to look at the options and see what is best for the community.

A report from the city Planning and Development Department said the council could consider zoning ordinances that would prevent payday loan businesses from clustering together, but that idea first would need to be reviewed by the Columbia Planning and Zoning Commission.

Skala said that he hopes to start getting information from staff within the next month and that a work session probably will need to be set up. He added that the issue could be an item on the council's winter retreat agenda.

Fifth Ward Councilwoman Laura Nauser and Second Ward Councilman Jason Thornhill opposed the moratorium. Nauser said she was uncomfortable about "investigating" a legal business that already is regulated by the state.

Meanwhile, State Rep. Mary Still, D-Columbia, who has sought additional state rules for the payday loan industry, plans a "district hearing" on the issue at 6:30 p.m. Nov. 16 at the Columbia Public Library.


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Comments

terry bura November 4, 2009 | 1:02 a.m.

Does the liquor store , does the gun store selling amo,does the grocery store selling food ,auto dealer selling vehicles get investigated by the city fathers?

If the consumer can not handle the product is it the vendor's fault? Listen to Nauser/Thornhill let the state take care or it....

(Report Comment)
Ray Shapiro November 4, 2009 | 1:24 a.m.

("Wade told the council Tuesday that the moratorium should be a time to look at the options and see what is best for the community.")

If "the community" is comprised of those who must use these "legal loan sharks," I would hope that the city partner with United Way and the Interfaith group in hopes to find ways to assist nonprofit human care service agencies and church congregations to administer low-no interest assistance programs to float these people in need.
If the city is looking to "get in bed" with these high interest private lenders, I would have to refrain from supporting their ambitions.

(Report Comment)
Mark Foecking November 4, 2009 | 8:22 a.m.

terry bura wrote:

"Does the liquor store , does the gun store selling amo,does the grocery store selling food ,auto dealer selling vehicles get investigated by the city fathers?"

Well, in many cases they do. The liquor store gets investigated for possibly selling to underage customers, and the gun store can get investigated for selling a gun to someone not passing a background check. The difference is they are being investigated for illegal activity, and high interest payday loans are not illegal.

Part of me thinks that the problems poor eople have with credit woiuld be lessened by regulating these places, but I have to agree with the free-market guys. If someone wants to pay $20 to borrow $100 for a week, let them. They're hurting no one but themselves.

DK

(Report Comment)
Charlie Triplett November 4, 2009 | 9:17 a.m.

"If someone wants to pay $20 to borrow $100 for a week, let them. They're hurting no one but themselves."

While you can't outlaw stupidity, the state can and should regulate or outlaw business practices that take advantage of people.

You write a check for $225, dated for your payday because you don't have the money to cover it until then. The Payday Loan company will give you $200 cash on the spot all for a mere $25 service charge, which equates to over 650 percent interest annually.

There's a reason payday loan places don't cluster around wealthy neighborhoods — they take advantage of the poor (or soon to be poor) and the uneducated.

(Report Comment)
John Schultz November 4, 2009 | 9:26 a.m.

Considering the city charges $30 or $45 to turn on your utilities if your bill is delinquent, the theoretical $25 charge may save the person money and keep the power on. From the city's website:

If a customer's delinquent account is on the shut-off list, the following charges apply:

$15 trip fee
$15 for the re-connection trip fee.
$15 for after hours connections trip fee.

(Report Comment)
Mike Sykuta November 4, 2009 | 9:45 a.m.

So the City thinks it might be better to make it more difficult for users of payday loan services to shop for the best deal?

I suspect many payday loan shop owners will be very happy with such regulations...especially those who currently exist and would be grandfathered into their current locations without having to worry so much about competition opening up for their local clientele. What better way to increase prices than to have the city reduce your competition?

There has been a good bit of research on how this particular industry is actually used very rationally and consciously by people who have access to other forms of credit and financing. That research also shows that the prices payday loan companies charge are lower than the prices banks charge for accidentally bouncing a check when it gets cashed and processed faster than the person writing it hoped.

(Report Comment)
Charlie Triplett November 4, 2009 | 10:48 a.m.

"So the City thinks it might be better to make it more difficult for users of payday loan services to shop for the best deal?"

There is NO good deal with a payday loan; the only good deal is to NOT get a payday loan. Think.

"...prices payday loan companies charge are lower than the prices banks charge for accidentally bouncing a check when it gets cashed and processed faster than the person writing it hoped."

Seriously? Overdraft charges by banks are a ripoff too! How about leaving people consequences so that they learn how to write valid checks?

Look past your nose, man. Think things through.

Money management is about personal behavior. People will misbehave if someone gives them a way. Payday loans hurt people by giving they a way to avoid consequences of a bounced check, only getting them in worse condition than they were in.

If they just bounce the check, get the lights turned off, maybe they'll learn to budget their money... ever think of that?

(Report Comment)

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