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CU System
Payday loans addressed in several states
MADISON, Wis. (4/15/10)--Credit union leagues in several states are supporting efforts by lawmakers to stop payday lenders from taking advantage of consumers. The Arizona Credit Union League was instrumental in defeating the latest attempt by the state’s payday lending industry last week. The measure would have allowed lenders to continue operating after a June 30 sunset date. Lenders tried to amend language in a state consumer lending code to fit their product model, and the league worked throughout the weekend to defeat the measure, said Austin DeBey, vice president of governmental affairs for the league. Although the defeat won’t be certain until the legislature adjourns in early May, the league “doesn’t see it coming back,” DeBey said. Including its latest attempt, the payday lending industry had tried three times to continue operating beyond the sunset date. The league partnered with the Center for Responsible Lending, AARP, credit unions and other community groups to defeat the industry’s attempts to continue offering payday lending. The league hasn’t taken a position against an industry before, but decided to get involved because it has seen credit union members fall victim to payday lending, DeBey added. In its next step, the league will partner with lawmakers and other community groups on a public awareness campaign to ramp up its REAL Solutions efforts. “We’re going to try and provide some public outreach on what small dollar loans are out there,” DeBey said. “We want to create a way for people to transition from post-payday lending. We opposed payday lending, but are looking to find ways to help people [obtain small loans].” The Maryland General Assembly approved legislation to close a loophole payday lenders use to avoid Maryland’s interest rate cap on small consumer loans--especially those made online. Gov. Martin O’Malley is expected to sign the bill, which would be effective Oct. 1 (Baltimore Sun April 12). The Maryland and District of Columbia Credit Union Association (MDDCCUA) supports the effort. “MDDCCUA, as an original REAL Solutions league, applauds Maryland’s efforts to regulate the payday lending industry,” MDDCCUA President/CEO Mike Beall told News Now. “The ability to have payday lending outlets on the Internet sidesteps Maryland’s strong anti-payday lending laws should not be allowed by technicalities that further confuse consumers.” In New Mexico, The Daily Times published an op-ed piece Sunday about payday lending. The newspaper urged readers to “consider a small loan from your credit union or a small loan company” instead of using payday lenders. “You may want to check with your employer, credit union or housing authority for no- or low-cost credit counseling programs, too,” the paper said. The Times also noted that laws passed in the state within the past few years have helped regulate the industry. Under the law, lender charge fees instead of an interest rate--at no more than $15.50 for each $100 borrowed.
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