Posted: Sep 29, 2010 9:26 AM by Beth Saboe (KPAX-Missoula)
The debate over whether to cap interest rates for payday loans continued in Missoula Tuesday night. The League of Women Voters held a forum at the Missoula Public Library for both sides to talk about the controversial ballot initiative.
Initiative 164 would cap the interest rate of payday and title loans at 36%. Supporters of the ballot measure say the average annual interest rate on a payday loan is 400%. They call this type of lending "predatory" and say I-164 will protect Montana's low-income and senior residents.
"I'm grateful for the opportunity to give a voice to my clients that suffer at the hands of these high-interest rate loans. These types of loans really trap consumers into a cycle of debt that is very difficult for them to overcome," said Greg Harper of the Consumer Credit Council.
Meanwhile, opponents say the measure is a prohibition on the short-term loan industry and point out that bank overdraft fees can run upwards of 700%.
"In today's economy, when banks and other financial institutions are charging up to $35 to bounce a $5 check, it makes the $15 we charge on a $100 loan look pretty small," said Bernard Harrington, an industry spokesperson who owns several payday loan stores.
Whether I-164 actually goes before voters in November will be decided in the courtroom. Opponents sued the state in an attempt to remove the measure from the ballot. They claim supporters used deceptive practices to gather signatures for the initiative.
A 2-day trial is set to begin in District Judge C.B. McNeil's courtroom in Polson on Thursday, September 30.