Less than four months after voters overwhelmingly rejected a measure that would allow lenders to charge triple-digit interest rates for short-term loans, a House panel did the same thing.
In a surprise move Monday, Republican Rep. Doug Quelland joined the Democratic minority to kill House Bill 2608. It would have created new lending regulations in Arizona to allow financial services companies to loan up to $3,000 with annual interest rates of up to 113 percent.
The final vote was 4-4, effectively rejecting the plan before the House Committee on Banking and Insurance because it lacked a majority vote.
Quelland gave no reason for his vote and immediately left the hearing room and could not be reached for comment.
"This is the way it was supposed to be," said Lupe Solis, an advocate with AARP Arizona, which opposed the bill. "Arizona consumers should be protected, and Arizonans said so in November."
In the fall, voters by a 60 percent margin rejected a proposal that would have required payday lenders to lower the maximum annual interest rate to 391 percent from 460 percent. That measure also would have indefinitely extended their state licensing, which expires July 1, 2010.
Currently payday loan shops, which have boomed in Arizona, can loan up to $500 instantly to someone with a steady job and checking account.
The payday loan industry, through a spokesman, said it had no comment and did not take a position on the legislation. The group is waiting to see what banking reforms will come out of Congress.
Arizona law requires all lenders, except payday loan shops, to charge no more than 36 percent annually in interest for a loan.
The rejection of HB 2608 marks the fourth straight year that a similar bill failed to pass muster with legislators.
"For now, it's dead," said Rep. Andy Biggs, R-Gilbert, the bill's sponsor.
Biggs said he was surprised with the outcome, and he had told the eight committee members the legislation was needed because borrowers seeking unsecured loans typically can't get a loan from a traditional bank or credit union. He also said the national financial meltdown has made obtaining a loan even more difficult.
"What you have to realize is there are people who need these loans. Where will they turn?" Biggs said.
Biggs also said there would be a need for this type of business should payday lenders go out of business next year.
Opponents of the bill said it was just another version of the ballot measure that voters rejected last fall.
"This is a new version of predatory lending," Kathy Jorgensen, an advocate with Society of St. Vincent de Paul, told the committee.
Biggs said the legislation differed from payday lenders because the interest rate was lower and the loan limits were higher. He said lenders who would provide these loans currently do not operate in Arizona, but they have stores in at least seven other states.
He said the interest rates range would have ranged from about 51 percent to 113 percent, depending on how much is borrowed and the length of the loan.
The legislation would have allowed loans of $200 to $3,000, and they would have to be repaid in five to 24 months. Interest-only payments were prohibited and borrowers could repay loans early with no penalty.
In a surprise move Monday, Republican Rep. Doug Quelland joined the Democratic minority to kill House Bill 2608. It would have created new lending regulations in Arizona to allow financial services companies to loan up to $3,000 with annual interest rates of up to 113 percent.
The final vote was 4-4, effectively rejecting the plan before the House Committee on Banking and Insurance because it lacked a majority vote.
Quelland gave no reason for his vote and immediately left the hearing room and could not be reached for comment.
"This is the way it was supposed to be," said Lupe Solis, an advocate with AARP Arizona, which opposed the bill. "Arizona consumers should be protected, and Arizonans said so in November."
In the fall, voters by a 60 percent margin rejected a proposal that would have required payday lenders to lower the maximum annual interest rate to 391 percent from 460 percent. That measure also would have indefinitely extended their state licensing, which expires July 1, 2010.
Currently payday loan shops, which have boomed in Arizona, can loan up to $500 instantly to someone with a steady job and checking account.
The payday loan industry, through a spokesman, said it had no comment and did not take a position on the legislation. The group is waiting to see what banking reforms will come out of Congress.
Arizona law requires all lenders, except payday loan shops, to charge no more than 36 percent annually in interest for a loan.
The rejection of HB 2608 marks the fourth straight year that a similar bill failed to pass muster with legislators.
"For now, it's dead," said Rep. Andy Biggs, R-Gilbert, the bill's sponsor.
Biggs said he was surprised with the outcome, and he had told the eight committee members the legislation was needed because borrowers seeking unsecured loans typically can't get a loan from a traditional bank or credit union. He also said the national financial meltdown has made obtaining a loan even more difficult.
"What you have to realize is there are people who need these loans. Where will they turn?" Biggs said.
Biggs also said there would be a need for this type of business should payday lenders go out of business next year.
Opponents of the bill said it was just another version of the ballot measure that voters rejected last fall.
"This is a new version of predatory lending," Kathy Jorgensen, an advocate with Society of St. Vincent de Paul, told the committee.
Biggs said the legislation differed from payday lenders because the interest rate was lower and the loan limits were higher. He said lenders who would provide these loans currently do not operate in Arizona, but they have stores in at least seven other states.
He said the interest rates range would have ranged from about 51 percent to 113 percent, depending on how much is borrowed and the length of the loan.
The legislation would have allowed loans of $200 to $3,000, and they would have to be repaid in five to 24 months. Interest-only payments were prohibited and borrowers could repay loans early with no penalty.
