St. Augustine Record
Missouri Gov. Jay Nixon has vetoed a bill that would have re-written the state's payday loan laws. He called the newly proposed limits an industry-backed “sham” that fell short of “true reform” and said it was better to leave the current law in place. There are still hopes of pushing for stricter regulation in the future.
Nixon said the bill would have failed to prevent “the cycle of debt that payday lending perpetuates” and that the legislation “appears to be part of a coordinated effort by the payday loan industry to avoid more meaningful reform.”
State law currently limits payday loan interest and fees at 75 percent for the life of the loan. For a typical two-week loan, the full amount would equal an annual percentage rate (APR) of 1,950 percent. The proposed legislation would have capped the interest rate at 35 percent for the term of the loan, or an estimated APR of 912 percent for a two-week loan. Both opponents and supporters of the bill, however, acknowledged that the caps are largely meaningless, since payday lenders typically do not charge that much. A typical payday loan in Missouri has an APR of 455 percent, said Molly Fleming, policy director at Communities Creating Opportunity.
Aside from the interest-rate cap, the legislation would have rolled back a law that limits payday loans to six rollovers. Loan renewals would have been banned under the new proposal, but extended payment plans would have been allowed. The industry group United Payday Lenders of Missouri remained neutral on the measure but supported other provisions that included an increase in the businesses’ annual licensing fees.