He calls it legalized loan sharking. Attorney General Jay Nixon says payday lenders are ripping off the poorest of the poor. That’s why he is urging the legislature to approve one senate bill and two related house bills that would slash the current 1,950% allowable interest rate for payday loans to 36% APR, prohibit renewals of those loans, and grant the Attorney General’s Office oversight of the industry. Nixon says these limitations are comparable to all of Missouri’s contiguous states and says they match federal regulations already in place for payday lenders near military facilities.
Nixon says the state’s current lack of oversight in the industry is an embarrassment. A report from the Division of Finance listed last year’s average APR for payday loans in Missouri at 422%. Nixon says payday lenders are profiting off the state’s neediest residents who can’t afford food, clothes and heatlh insurance and he says the excessive exploitation must stop. The payday loan industry reported more than $300 million in profits last year. The Division of Finance’s report lists Missouri’s payday loan industry as the second most profitable in the nation. It says Missourians borrowed about $790 million last year at a rate that would be equivelent to one loan for nearly half the state’s population. Nixon says that changes in the federal bankruptcy law are further compounding problems for borrowers because they are simply locking themselves into a a spiral of debt.