Kansas To Consider Capping PayDay Loan Interest

(Associated Press) -- When North Carolina lawmakers capped the amount of interest payday loan companies could charge their customers for short-term loans, the industry went bust in that state.
Melody McCray-Miller, a Wichita Democrat is hoping a measure she plans to introduce in the upcoming legislative session - which could include and interest rate cap similar to the one that drove the payday loan industry out in North Carolina - would make "predatory lending" less lucrative in Kansas.
Sunflower Community Action, a grass roots community group seeking tighter restrictions on payday lending, backs Miller's efforts.
"Whatever they're doing in North Carolina should be what's done everywhere," said J. J. Selmon, community organizer for the groups northeast chapter.

After reading the above story, I set out to ask Representative Miller a few questions. Below is the result of that interview between her and I.

P. O. T.) Can you explain, for the readers what the bill is and what it would do if it passes?

McCray-Miller) The bill will do 3 things: 1. Strengthen the current Payday Loan statute with additional consumer protection clauses. 2. Regulate consumer loan transactions secured by a motor vehicle (better known as car title loans). Cap the interest rate of these "secured" loans at 36%. 3. Create a data base for the purpose of verifying compliance from the lending industry.

P. O. T.) Why do you want to regulate the payday loan industry?

McCray-Miller) We are looking at this issue from a consumer protection lens. The amendment and new law proposed are designed to better protect consumers from predatory lending while at the same time better educate the public to the need for financial literacy and bring awareness that other lending currently exist and more are needed.

P. O. T.) Do you have any co-sponsors? Bi-partisan?

McCray-Miller) Currently, the co-sponsors are, Rep. Oletha Faust-Goudeau (D-Wichita) and Sen. Donald Betts(D-Wichita). Rep. Deena Horst (R-Salina) and Sen. (Chris) Steineger (D-Kansas City) have both shown a keen interest in the proposed legislation.

P. O. T.) Will this bill also affect the high-priced rent to own stores, title loan places and other such rip off artists.

McCray-Miller) This bill will directly affect title lenders.

P. O. T.) What do you think the chances of this bill passing?
McCray-Miller) I believe the bill has a good chance of getting a fair hearing and becoming law.

P. O. T.) When do you plan to introduce this bill?

McCray-Miller) The bill will be introduced at the beginning of the 2007 Legislative Session.

P. O. T.) What do you think is the possibility of Congress taking up a bill like this and making these regulations national?

McCray-Miller) Congress just recently approved and passed a law that caps the interest rate on loans considered to be predatory for military personnel and family members. I and many others believe that if Congress identified Payday, Auto title and other predatory lending practices as harmful and a threat to our nations security, the same is true for our local communities and the people that work and live in them.

Whitney Damron, lobbyist for the Kansas Payday loan Association said, "people who are critical of payday loans are trying to take a choice from customers." In addition, he said that government shouldn't get involved credit decisions for consumers any more than it should tell consumers how many credit cards or mortgages they should have.

Well Mr. Damron, I have to disagree with you here. Your objectivity is clouded by the money that this rip off industry is paying you. If a company or an industry specifically targeting and ripping off the consumer, it is the job of the government to protect the consumer. Protecting the consumer is all this bill is doing. I look forward for the January 8Th opening of legislative session and subsequently the introduction and eventual passage of this bill.

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