JACKSON, Miss. (AP) — Mississippi lawmakers may never have to debate payday loan interest rates again.
The state Senate gave final approval Friday to House Bill 559, which deletes the requirement that lawmakers periodically renew authorization for the loans. The bill passed the Senate 31-13 and goes to Gov. Phil Bryant for his consideration. It would become law immediately.
At Mississippi payday lenders, borrowers can get short-term loans by writing checks that cover the amount borrowed, plus fees. State law gives borrowers 30 days to repay loans, capping fees at $20 for every $100 borrowed up to $250. For amounts $251 to $500, a lender can charge $21.95 per $100 borrowed. That's a maximum 574 percent interest rate for a two-week loan.
Americans spend $7.4 billion per year on the high-interest rate loans, including an average of $520 in interest per borrower who ends up indebted for five months of the year, the Pew Charitable Trusts reported in February. That group found that most borrowers can't pay off loans in the short span allowed.
But supporters of the bill say that no matter how distasteful, they're one of the few options for people to borrow small amounts of money.
"I hope I don't need that service, but I hope if I do, it's there," said Sen. Gary Jackson, R-French Camp.
Mississippi had 1,111 licensed payday lenders as of Sept. 30, according to Banking Department numbers. At the time, those lenders had more than 196,000 loans outstanding, with nearly $42 million on loan, an average of a little more than $200. Most loans turn over every two weeks. That works out to about five million loans a year, worth a total of more than $1 billion.
Legislators voted in 2011 to allow payday lenders to operate in the state until 2015. It's not unusual for state laws to be enacted for a limited number of years. But Jackson said the Legislature should erase the time limit "for peace of mind of the industry." He also said the federal Consumer Finance Protection Bureau is likely to take over regulation, and state lawmakers would no longer need to worry about it.
"If you delete the repealer, you're not going to have the opportunity to have the debate on this issue again," said Sen. David Blount, D-Jackson, who opposed the bill.
Sen. David Jordan, D-Greenwood, said lawmakers should cut maximum rates.
"And put these people out of business?" Jackson replied. "If we legislate away the opportunity to borrow, it does not legislate away the need."
"As a deacon, you won't find me pushing a bill like this," Jordan said.
Jackson, though, replied that the Bible enjoins Christians to lend money without charging interest. "I don't see you out in the street loaning money either," Jackson said to Jordan.