Former Columbia pastor pushes for ballot initiative to limit payday-loan rates

Tuesday, August 16, 2011 | 8:10 p.m. CDT; updated 10:20 p.m. CDT, Tuesday, August 16, 2011

COLUMBIA — A retired Columbia pastor has joined Missouri religious groups and civic organizations working to get a measure on the state's 2012 ballot that would limit the cost of short-term loans.

The Rev. Jim Bryan, who retired as pastor at Missouri United Methodist Church in June 2010, is treasurer of the faith-based Missourians for Responsible Lending. His group has filed a ballot initiative that gives voters the option of capping interest rates on short-term loans, including payday and car title loans, at 36 percent.

"We feel that the payday loan industry unfairly targets people who are in financial distress, and perhaps even in a desperate situation, and charges an unreasonably high rate of interest," Bryan said.

Currently, Bryan said, Missouri's short-term loan laws allow for a 1,900 percent interest rate, which he says is unacceptable.

"For people who use these companies, it makes their financial problem worse," Bryan said.

The average annual interest rate charged by Missouri payday lenders is 445 percent, according to the Missouri Department of Insurance, Financial Institutions and Professional Registration. That's higher than the nation's average annual rate, 391 percent, as reported by the Community Financial Services Association of America.

Saku Aura, an association professor of public economics at MU, said he believes the ballot initiative could prove beneficial in some ways, but might make it harder for people to get credit in the long run.

While Aura acknowledged claims that people are struggling with these loans and making irrational decisions, he added that "it's also true that many people are using this loan as the last resource because they don't have access to any other type of credit."

He said the ballot initiative could lead to the disappearance of payday lenders or a dramatic change in the services they provide.

The Community Financial Services Association of America argues that the nation's 391 annual percentage rate figure for any short-term loan is misleading because the loans are not issued on an annual basis. The association also noted that the fees for bouncing checks or for making late payments on credits cards are higher than the interest charged on payday loans.

“I think that the short-term loan does work for some people, in some situations, but the problem is what happens if it doesn’t work. People are dragged down into death,” Bryan said. “The example is the average loan across the state. The average payday loan is around $300. And the average payout is over $700.”

Bryan said the group is trying to get the initiative on the ballot so the issue can be placed in the hands of voting citizens instead of the Missouri General Assembly.

“It has been brought up in the Missouri House, and one of the persons who is in charge of the process has a personal interest in one of these (payday loan) companies, which was totally unfair,” Bryan said. “So if we can get the people themselves in Missouri to sign the petition, then it’s people in Missouri who are deciding, not the legislators."

Secretary of State Robin Carnahan approved the ballot language last week. Missourians for Responsible Lending now needs to obtain signatures from 5 percent of registered voters in six of the state's nine congressional districts by May 6.

The National Association for the Advancement of Colored People, the Church Community Organization in Kansas and the Missouri Association for Social Welfare are also backing the measure, Bryan said.

Bryan said the involvement of faith-based groups in the proposed initiative is not necessarily inappropriate, though some people argue that religious groups should keep their faith out of the public arena.

“My personal relation is primarily to my faith, but it doesn’t mean that it is inappropriate,” Bryan said. “It certainly influences how I see the society, and I want to lift up and work for what I see is equitable and free and just to society. And this particular practice is unjust, so I speak against it.”

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Ricky Flores August 17, 2011 | 2:39 p.m.

It seems illogical to put an APR on a cash advance. It's like an ATM fee, which if my math is correct, for $20 I pay $6 bucks and that's like 720% EXCEPT it's NOT. It's a fee for service and while I'm not defending anyone, I'd like to see our political process honest with such an emotional thing.

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