Payday Loans Initiative Fake Reform

Governor Janet Napolitano officially endorses NO on 200

Joins leaders from across the state in urging rejection of fake-reform measure

PHOENIX – Governor Janet Napolitano today voiced her opposition to Proposition 200 and the payday lending industry by officially endorsing the No on 200 Campaign.

“In today’s economy, the last thing we need is to force working families further into debt. Please join me in voting NO on Proposition 200,” said Gov. Napolitano.

The payday loan industry was given an exemption to the Consumer Loan Act by the Arizona Legislature in 2000, allowing them to charge over 400% interest on short term loans.  Payday lenders have been reaping the benefits of the exemption since 2000.  However, that could become a fond memory for the industry as the exemption will sunset in July 2010.  Payday lenders will then have to abide by the Consumer Loan Act and cap their interest rates at 36%, like other lenders.

While the payday loan industry has been fighting the sunset in the Legislature and now with Proposition 200, the Governor has made clear that should Prop 200 not pass, she would not step in to help payday lenders and would therefore allow the exemption to sunset as scheduled on July 1, 2010.

“Our campaign is thrilled to have the support of Governor Napolitano, a leader who has always been a friend to both the businesses and consumers of Arizona,” said Ken Clark, manager for the No on 200 campaign.

Proposition 200 is a payday industry-funded initiative claiming to be a reform of the industry – but it would in fact give the industry more power.  Not only would they be authorized to charge 400% interest rates forever; Prop 200 would also give them electronic access to borrowers’ checking accounts, worsening the debt trap.

A less obvious but enormous advantage for the industry if Prop 200 were to pass is that they will have been authorized to write their own regulations.  In this economy, that is truly a dangerous precedent; Arizonans should not set it.

www.200isNoReform.com

Technorati Tags: Initiative, Payday Loans, Proposition 200