Saturday I reported that Lisa Furlong of North Sioux City has created a ballot question committee, South Dakotans for Fair Lending, whose stated mission sounds like the decoy initiative tactic used by the payday lending lobby in Missouri in 2012. Now I can share the text of Furlong’s proposed constitutional amendment, which would not only confuse petition signers and voters but would, if passed, override the interest-rate cap initiative being circulated by Steve Hildebrand and Steve Hickey.
Here is the proposed amendment, as submitted to Attorney General Marty Jackley’s office for review:
The amendment pretends to cap interest rates at 18%, but that cap is made meaningless by “allowing” borrowers to agree to another rate in writing. This amendment would have zero practical effect on payday lending in South Dakota: every payday loan at every triple-digit interest rate would be just as legal post-amendment as it is now. Nothing would change for borrowers and the predatory lenders who trap them in an abusive cycle of debt.
The primary purpose of this proposal appears to be what it was in Missouri in 2012: to allow the payday lending lobby to hire circulators to walk around with petitions, ask people, “Would you like to sign a petition to cap interest rates?” and thus confuse voters who think they are signing the real interest-rate-cap petition.
But read the title and the second section of the Furlong proposal, and you can recognize two other purposes the amendment could serve. Suppose Hildebrand and Hickey overcome the payday lenders sneaky tactics and get enough signatures to put their slam-dunk measure on the 2016 ballot. If the payday lenders can collect enough signatures to place their measure on the ballot, they can sow more voter confusion right through Election Day. The payday lenders can create a smokescreen by pointing to the title and the second section and saying, “See? We want to stop discrimination!”
The second section says no law can set different interests rates or other charges for different classes of lenders. The Hildebrand-Hickey initiative caps interest rates for payday, title, and short-term lenders, not for state and national banks, trust companies, and other federally insured financial institutions. If both the real interest-rate cap and this decoy constitutional amendment pass, the constitutional amendment would take priority and annul the voters’ likely desire to set real caps on payday lenders before it ever takes effect.
The Attorney General’s office has not issued its explanation of Furlong’s amendment, and the Secretary of State has not yet approved that petition for circulation. So right now, the only petition relating to interest rates on the street should be the real Hildebrand-Hickey 36% interest-rate cap. But pay close attention, citizens! If a circulator approaches you with a petition dealing with interest rates, ask the circulator these questions:
- For whom are you circulating? [Correct answer: South Dakotans for Responsible Lending. Incorrect answer: South Dakotans for Fair Lending.]
- What’s your rate cap? [Correct answer: 36%. Incorrect answer: 18%]
If you get the right answers to those two questions, please do sign. If you get the incorrect answers, take a picture of the petition and the petitioner, and tell them to take their dirty tricks elsewhere.