Tuesday, September 12, 2006

Debate Over Payday Loans in Mississippi Rages On

By J.J. Cameron
Payday Loan Writer

Simply because the Mississippi Center for Justice is pushing for new restrictions on payday cash advance lenders doesn't mean changes are inevitable in the state.

There's still a great deal of convincing to be done.

A key legislator whose support would be needed to change state law says the businesses are lenders of last resort. David B. Miller, staff attorney for the Mississippi Center for Justice, said the intention is not to shut down faxless payday loan providers, but to require better reporting.

Payday Loan Information

"One thing we want to find out from a reporting bill is the frequency that the typical borrower borrows the money," Miller said to the Sun Herald. "If we find that the borrower is paying interest on the same loan for extended periods of time, that's not an emergency situation. It's one that needs to be policed because it simply traps people in a cycle of debt."

State law allows people to borrow up to $400 with a fee of $18 for every $100. The occasionally low fee payday loans are secured by a personal check and the full principal is due on payday. Figured annually, it amounts to 468 percent. Miller believes the fees should be lowered.

But Rep. Danny Guice, R-Ocean Springs, who chairs the House Banking Committee, counters that the fees are still cheaper than chasing a trail of bounced checks. Payday advance lenders are already regulated.

"When we enacted the legislation that's the law now, some of the lenders were charging $35 and $40 per $100," Guice said. "We have a first-rate banking department and banking commissioner, John Allison. He and I think a lot alike. As long as you know what the rules are and operate along the rules, you're fine. If you operate outside the rules, he's going to nail you to the wall."

The problem with the current payday loan online regulations, Miller said, is that the reporting records are kept in paper form. An electronic database would allow state regulators to see what percentage of people get trapped in debt by extending loans or taking multiple loans, he said.

Guice said privacy issues might prevent such information-gathering, but Miller said a system could be set up that takes this into consideration.The law that regulates the lenders sunsets next year, Guice said, and his committee will review the codes in the next legislative session.

Also, Guice said he believes the legal advocacy groups want to make it hard for the payday advance loan companies to do business. Miller counters that laws aren't stricter because the people affected aren't politically powerful.

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