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No Rate Cap: Amendment U Means “Business as Usual” for Payday Lenders

The payday lenders have not fooled the Sioux Falls Area Chamber of Commerce. In its combo brief on Initiated Measure 21 (the real 36% payday loan rate cap) and Amendment U (the fake rate cap thrown onto our ballot by the payday lenders), the Chamber correctly explains the effect Amendment U will have on payday lenders’ interest rates: absolutely none.

The first section creates an 18 percent rate cap on interest rates, but only on verbal loans. If the parties to the loan agree in writing to higher interest rate terms, there is no cap. This would allow payday, car title, and installment lenders to continue business as usual [Sioux Falls Area Chamber of Commerce, issue brief on IM 21 and Amendment U, approved 2016.08.17].

The Chamber thus appears to agree with me that Amendment U sponsor Lisa Furlong’s characterization of this fake rate cap as “strict” and “more stringent” than IM 21 is utter bunk.

The Chamber properly explains that only way to keep Georgia millionaire (that’s how the Chamber describes him!) and payday lender Rod Aycox from beating back a real payday rate cap is to vote NO on Amendment U and YES on IM 21. Oddly, the Chamber errs in describing how hard it will be to undo U if it passes:

Since these changes are being made to the constitution any attempt to repeal this new constitutional amendment would require a two-thirds vote in both houses of the legislature and require the Governor’s signature [SF Chamber, 2016.08.17].

Unless I’ve missed some arcane bit of South Dakota constitutionalia, the only way to undo a constitutional amendment is another constitutional amendment. Two processes can put new amendments on the ballot: voters can float a new amendment by collecting signatures equal in number to 10% of the voters in the last gubernatorial election, or a majority of members of each house of the Legislature can propose an amendment. Either way, a new amendment requires a majority vote by the electorate. There’s no two-thirds vote, and there’s no gubernatorial veto.

But let’s avoid all that complication. Let’s listen to the Chamber, recognize that Amendment U is a fake, and vote U down hard this November. And let’s pass IM 21 to check those fakers’ exploitation of our neighbors.


  1. Rorschach 2016-09-06 16:48

    The chamber should have explained that if anybody wants payday lenders to continue business as usual, it’s better to vote no on both IM21 and U than to vote yes on U.

    Why would anybody besides payday lenders themselves want to monkey with the state constitution to achieve the status quo when one could just vote no on both to achieve the status quo?

  2. David Bergan 2016-09-06 17:37

    Hi Ror,

    The Chamber does explain that. Twice actually.

    “Both fail: no change in law and the status quo is retained.”


    “It is interesting to note that those who vote “No” on IM 21 could easily vote “No” on
    Amendment U also. There seem to be two reasons. First, they simply do not believe we
    need to regulate this market as proposed in IM 21 and if it loses then Amendment U is
    unnecessary. Or, second, they simply believe putting language like Amendment U into
    our state’s constitution under the Bill of Rights is an unwise thing to do.”

    Bear in mind that the Chamber is not taking a formal position on this issue… and yet they bothered to write a very informative 4-page summary, that cuts straight through the payday lenders’ Angus feces. Would that more neutral parties be motivated to help civic education like this.

    Kind regards,

  3. Rorschach 2016-09-06 18:04

    Sounds well put together, David. I didn’t trouble myself to read the whole thing as you can tell. Thank you for the information.

  4. caheidelberger Post author | 2016-09-06 18:28

    Ror, note that Amendment U isn’t just the status quo. It builds walls around the status quo, making it harder for South Dakota legislators or grassroots activists to check the loan sharks.

    David, I hope you’ll understand if my spidey-sense tingles when someone says the Chamber of Commerce is a “neutral party”. I’m comfortable with their issue brief on 21 and U, but I’m not ready to view them as neutral purveyors of civic information on all issues.

  5. grudznick 2016-09-06 19:52

    I vote no and encourage everybody I meet to vote no on every initiated law thing, and vote yes on the referred measures. When the crazies are out petitioning everything under the sun it makes our representative democracy a shame and creates the chaos the far left wants.

  6. Darin Larson 2016-09-06 20:27

    Grudznick, I think what you are saying is that it is a shame when voters let the power of democracy go to their head and think that they rule themselves. The powers that be in this state know what is truly best and common folk are merely sheep to be shepherded by their masters in the Republican party or slaughtered as the situation requires.

  7. Mark Winegar 2016-09-07 06:53

    I think of this issue as Amendment Usury. Consider this passage, “If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.” (Exodus 22:25). While I would not go so far as to eliminate interest loans altogether I do take issue with the payday loan industry corrupting our constitution. Please vote “NO” on Amendment U and “YES” on Referred Law #22.

  8. David Bergan 2016-09-07 09:48

    “David, I hope you’ll understand if my spidey-sense tingles when someone says the Chamber of Commerce is a “neutral party”. I’m comfortable with their issue brief on 21 and U, but I’m not ready to view them as neutral purveyors of civic information on all issues.”

    Hi Cory,

    I agree that they aren’t neutral on all issues; they obviously are taking sides on a couple of them. My comment was referring to them as being neutral on the payday lending measures, and yet despite being neutral, they still put out a fantastic 4-page brief that cuts through the fog and helps the reader understand the consequences of his or her votes. Not a lot of neutral parties take the time to do that. Compared to the Secretary of State’s “official” brief on U+21, this one is much clearer and more educational. I think fellow Madisonian Mark Lee had a hand in writing it, and I’ve always respected him.

    Why does your spidey-sense tingle when you think about the Sioux Falls Area Chamber? Do you have an inherent bias against locally run businesses? I don’t agree in toto with any institution; but the core principle of a Chamber is meeting the needs of local (usually small) business owners, to foster an efficient, healthy, growing economy… and in my humble opinion, that’s better than an inefficient, stagnant, managed-from-a-distance one.

    Furthermore, it was at the SF Chamber where I met Dana Loseke, retired general manager of Dean Foods/Land O’Lakes, and current President of the SD Sierra Club, who first told me about how we need to curtail pollution in the Big Sioux River.

    Kind regards,

  9. caheidelberger Post author | 2016-09-08 09:29

    In that regard, David, yes, the SF Chamber does good work here. They declare no direct interest in the issue, but they take time to lay out the facts in detail. In this case, the facts appear to argue heavily against the subterfuge of the payday lenders and their fake Amendment.

    I like local business. I like local businesspeople. And I suspect that if I sat down with any given collection of local chamber members, we’d find we agree on more than we disagree about state and local issues.

    But I also know that the local businesspeople’s association wields lobbying power that is easily co-opted by bigger business interests and is sometimes used against the general welfare. I think I’m allowed to be at least as healthily skeptical of the business lobby, even the local business lobby, as some folks on the other side of the political fence are skeptical of the environmental lobby and other groups with whom I express my occasional allegiance.

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