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In Oregon, citizens mobilized to pass progressive tax hikes -- on corporations and families making over $250,000 -- to help avoid cuts in children's and health care programs.

Now in Montana, citizens are mobilizing for an initiative to put a cap on the interests pay day lenders can charge -- on simple theory that 400% is too much. Here's the local report

http://www.helenair.com/news/local/state-and-regional/article_2292aed0-2110-11df-bc18-001cc4c002e0.html

Groups launch initiative effort to cap payday loans at 36%

By CHARLES S. JOHNSON IR State Bureau | Posted: Wednesday, February 24, 2010 12:00 am | (0) Comments

Stymied at the Legislature, some groups said Tuesday they instead will ask voters to cap at 36 percent the annual interest rates that payday lending businesses can charge, compared with the current 400 percent maximum.

A coalition of groups representing seniors and religious, women’s, economic and union groups filed a proposed initiative with Secretary of State Linda McCulloch. If it clears a state legal review and if the backers obtain enough signatures, the measure would appear on the November 2010 ballot.

Recent legislative sessions have killed bills similar to the initiative so backers are turning now to the initiative process.

“We believe that 400 percent interest is too high,” said former state Rep. Sheila Rice, D-Great Falls, now is executive director of NeighborWorks, an advocacy group, and chairwoman of the Women’s Foundation of Montana Advisory Council.

Bob Bartholomew, state director of AARP Montana, said many elderly and poor Montanans are struggling to make ends meet, especially during the recession.

“Payday lenders have taken advantage of their struggle, providing high-interest loans that are repaid out of the worker’s next paycheck or the retiree’s next Social Security check,” Bartholomew said. “Reasonable short-term loans can be helpful for a worker trying to deal with an emergency, but these payday loans, charging more than 400 percent interest, frequently become a debt trap in which the borrower sinks deeper in debt.”

Tom Jacobson, executive director of Rural Dynamics, a Havre advocacy group, said more than 70 percent of these Montana lenders are owned by out-of-state companies. In 2008, he said, these companies made more than $40 million in loans in Montana and collected more than $9 million in interest and fees, “draining millions of dollars from Montana’s local economy.”

Rebecca Mastee of the Montana Catholic Conference said anyone could need an emergency loan in this economy, but added: “Montana families struggling to make ends meet should not be preyed on by lenders charging over 400 percent interest.”

In response, Bernie Harrington of Billings, who owns six payday loan businesses, defended the industry as serving a legitimate need for Montanans who need to borrow money.

“I think ultimately if the voters of the state understand they are going to hurt the consumers, they aren’t going to vote for it,” said Harrington, representing the Montana Financial Service Centers Association.

He said payday lenders charge a $15 fee on a $100 two-week loan, $25 on a $200 two-week loan.

“They don’t like to say it’s 15 bucks, but that it’s 400 percent APR (annual percentage rate),” he said. “They like to throw that out for shock and awe.”

But other financial institutions not covered by the initiative charge far higher annual percentage rates, he said. For instance, a bank that imposes a $27.40 for a $100 bounced checks charges 701 percent APR, while a $37 late fee on a $100 credit card bill amounts to a 965 percent APR.

Passage of the initiative would mean killing the payday lender industry in Montana, throwing at least 800 Montanans out of work, Harrington said. A 36 percent cap would mean a payday lender would make only $1.38 from a two-week $100 loan.

To qualify the measure for the November 2010 ballot, backers need to obtain more than 24,000 signatures of registered Montana voters by June 18, including 5 percent from 34 of the 100 House districts.

Based on what’s happened in other states, supporters said they expect to be outspent by the payday lending industry by at least 5-to-1. Harrington, who first learned of the effort Tuesday, said the industry will mount a campaign to make sure voters hear both sides of the issue.

The groups backing the initiative are: AARP Montana, homeWORD, Montana Catholic Council, Montana Community Foundation, Montana Women Vote, NeighborWorks Montana, Rural Dynamics, SEIU Healthcare Local 775 and the as opposed to launched a proposed ballot issue campaign Tuesday to limit interest rates charged by payday landing businesses at 36 percent annually.

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