Vote Now in DFP Poll: Real 36% Rate Cap vs. Fake 18% Rate Cap!

EndUsurySD.org says watch out for the payday lenders' trap!
EndUsurySD.org says watch out for the payday lenders’ trap!

Initiated Measure 21 and Amendment U are inextricably linked. After Sioux Falls politicos Steve Hildebrand and Rev. Steve Hickey began circulating the petition for IM 21 to cap payday lending interest rates at 36%, Georgia payday lender Rod Aycox launched the petition for Amendment U to supersede IM 21 with a fake 18% rate cap on oral loan agreements and a constitutional guarantee of unlimited interest rates on written loan agreements.

I thus want to poll these two measures together. Tell me, readers, how you will vote on IM 21 and Amendment U. Here are the four possibilities and their practical impacts:

  1. Yes on 21, No on U: payday lending interest is capped at 36% APR.
  2. No on 21, Yes on U: payday lenders continue business as usual; constitution protects unlimited rate caps by forbidding statutory rate caps.
  3. Yes on 21, Yes on U: U cancels 21, business as usual, unlimited interest.
  4. No on 21, No on U: business as usual, but Legislature and citizens can propose future statutory rate caps.

Note that Option #3, the Yes-Yes option, is illogical. If you really support the real 36% rate cap, you must couple your Yes on 21 with a No on U. Option #4, No-No, is logical: one can logically oppose the 36% rate cap and oppose the payday lenders’ petition trickery and constitution hijackery.

I’ll take votes through Thursday supper time; then when I get done running around campaigning, we’ll discuss the results.

So vote now, and bring your friends! Let’s hear what you think of payday lending, South Dakota!


6 Responses to Vote Now in DFP Poll: Real 36% Rate Cap vs. Fake 18% Rate Cap!

  1. The most recent time I voted in this poll I voted the way I will probably vote, a more Libertarian way like my some of my Libertarian friends would do. But I still encourage anybody confused by USTRVLMNOP19202122 to just vote NO on Everything! Just like Mr. Howie, in a rare moment of clarity, encourages. Remember, he ran for Governor and almost won.

  2. 36% is more than generous enough for those swindlers. The number should realistically be much closer to 12% across the board on all forms of lending. That should weed out the credit cards as well. I long for the day when credit is only extended to those who can sit access the desk from a banker and prove their ability to service that debt.

  3. No to both.

    A 36% cap will kill payday loans as a financial service.

    I think following Colorado’s example of lender reform is a good way to mitigate the real pernicious damage payday lenders can do to a select segment of their customers.

    http://www.pewtrusts.org/~/media/assets/2014/12/pew_co_payday_law_comparison_dec2014.pdf

    I’d welcome an initiated measure to cap interest rates at 115% and make the minimum term of a loan 6 months with required installments. Doing so should reduce the number of loan seekers who are unable to repay their loan, but the service will still be available for the folks who need it and have no alternative.

    As long as payday loan companies are required to tell potential customers up front how much the total bill is going to be, I don’t see a compelling reason to interfere to the point where we’d kill an industry and give people no alternative means of dealing with financial shortfalls. Afterall, if a woman can rationally and responsibly choose to carry a fetus to term or end its life prematurely, surely an individual can make a rational decision about whether or not to seek a payday loan with its heavy fees.

    The fact that 12 million Americans use the payday loan industry as a financial service annually speaks to the need for short term cash a bank is unable or unwilling to loan.

  4. Wayne, does the minimum term prohibit borrowers from paying back the loan right away if they come into cash?

    Don’t payday lenders already have to display their interest rates? To implement your compromise reform, how do we ensure that the disclosure is truly up front and prominent and not just fine print on page 40?

    Remember, Steve Hickey offered compromise legislation in 2014. He thought he had industry support, but then the payday lenders yanked the rug out from under him.

    Comparing payday lending and abortion? Boy, you do like to put the moral screws to us, Wayne. Here’s one important distinction: in payday lending, it’s the payday lenders who lie. In abortion politics, it’s the anti-abortion crisis pregnancy centers who lie. A bigger distinction: in payday lending, we are reining in an industry that deliberately exploits a vulnerable population. In abortion, we are dealing with health care professionals providing a constitutionally protected right to bodily autonomy.

  5. Financial service?!? Are you freaking kidding me?? I suppose you consider the guy standing on the corner peddling cocaine to be providing a service as well…

  6. Cory, I don’t know the particulars of Colorado’s reform; just what I read from that Pew document. My assumption is it would fall under the auspice of other installment-type loan regulations which prohibit early payment penalties.

    I’m comparing ability and right to choose, not conflating payday lenders with anti-abortion crisis centers. If a person has the agency to choose what to do with an unplanned pregnancy, then they certainly can make financial decisions. I don’t advocate for forced physician language or forced counseling by a non-neutral party prior to seeking an abortion. And nobody forces people to walk into a payday loan company. We DO force the payday loan company to put all the cards on the table.

    I don’t perceive payday lenders as liars. They’re required to show the full cost of the loan upfront. https://www.checkngo.com/resources/state-center/sd.rates The onus is on the customer to decide if they can afford to pay back that loan. We could make it easier by requiring installment plans – doing so in Colorado dropped the debt service burden to 4% of biweekly income, compared to 38% prior to the reform (that’s better than Hickey’s compromise of 2014). Colorado saw a 40% reduction in loan rollovers, and a 50% reduction in bounced check fees. That’s impressive!

    Do payday loan companies have a negative impact on a subset of their customers? Absolutely. According to Pew, about 22% take out 6 or more loans sequentially. But the other 78% do “okay” with the service. A full third pay the loan back in full within the two week period. The rest take out a couple of rollovers, but eventually stabilize their position and exit within two months.

    It’s a rational decision – borrow $300 and pay $75 in interest/fees or:
    a) write three bad checks which bounce and get charged $120 for bounced check fees; or
    b) suffer the consequences of not paying the bill (if it’s a final notice before shutting off water, sewer, or getting kicked out of your apartment, the $75 fee makes sense)

    Do I like payday loans? No. But they fill a niche for financially vulnerable populations. Eliminating the service alltogether doesn’t present a solution that makes that population better off.

    If Hickey or Hildebrand circulate a petition to copy Colorado, I’ll sign it.