Payday lending practices questioned - - Jackson, MS

Payday lending practices questioned

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By Julie Straw - bio | email | twitter

JACKSON, Miss. (WLBT) - A battle over pay day lending businesses was brewing under the capitol dome. 

A standing room only public hearing was held Monday for lawmakers to hear supporters and opponents speak out about the issue. 

At issue was a state law which currently allows payday lenders to charge a 572% annual interest rate. 

The law expires in 2012.  

It is up to Mississippi lawmakers to decide to renew it or not.

"In the state that has the highest rate of poverty in the nation we also have the highest concentration of payday lenders in the nation," said a member of the clergy in Monday's meeting.

Religious leaders, members of the NAACP and the Mississippi Center for Justice all spoke out in opposition to payday lenders, saying they're preying on low income families.

"Only 2% of the people who get a payday loan can pay a loan back in the two weeks that it is due," said Paheadra Robinson for the Mississippi Center for Justice.

The Mississippi Center for Justice was asking lawmakers to hold the lenders to the same standards as banks and credit unions by capping the annual percentage rate at 36%.

Dan Robinson,with Borrow Smart Mississippi, said that would put every payday lender out of business.

"Our businesses service a lot of small towns.  There's just simply not enough value in those towns to be able to withstand a 30% reduction in revenue," Robinson said.

Robinson and the companies he supports said people need a place to get quick short term loans of $100 to $400.

"Everything is up front.  There's nothing shady.  There's nothing sneaky and there's nothing to be embarrassed about," said Ricky Easterling who uses the payday lending businesses.

"We're going to propose we keep the law as is in Mississippi.  We have a 13 year track record. It's one of those things if it is not broke why fix it," Robinson said.

Opponents hope the exception for payday lenders will expire along with the law in 2012.

"If 36% is not enough then what is enough for you to operate a business that is supposed to be a service for the communities," said Paheadra Robinson.

The House Banking and Financial Services Committee is expected to vote on this issue Tuesday.

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