OKPOLICY.ORG
By Brett Dickerson
As a pre-teen, Angela Basse saw her mother go through a hard divorce and then turn to a payday lender for help with a bad financial situation. Her mother had three children to raise by herself.
“I was a part of the vicious cycle of payday loans,” said Basse, now the Coordinator of Youth Ministries at St. Charles Borromeo Catholic Church.
“The payday loans were very enticing. At the time, they were made to look simple.”
And to her mother who was stretched close to the breaking point emotionally and financially, payday loans looked like the only way out, said Basse.
“We missed out on book fairs in schools, field trips at school, because we didn’t have the income. Because we knew that we were having to pay back loans,” Basse said.
She was one of thousands in the state and across the nation who get stuck in a cycle of payday loans where they never get out of debt because of high interest rates and fees.
In Oklahoma, the current average percentage rate or APR on payday loans can go as high as 390 percent. That’s not a typo. It’s three hundred and ninety percent.
VOICE – Voices Organized in Civic Engagement – is a diverse group of political and religious leaders who are pushing for reform of the payday loan laws. They laid out their concerns at a news conference Wednesday at the state Capitol.
Several of their group of presenters referred to payday loans as “predatory.” And one Republican representative said the loans “perpetuate poverty.”
Proposed reform
Specifically, the group wants to lower the maximum allowed interest rate, create a unified database of loans and use that database to limit the number of payday loans anyone can take out in one year.
According to VOICE, those measures would not make Oklahoma overly strict or an outlier.
The group points to 15 states that have outlawed payday loans completely, and eight more that strongly limit the interest rates and number of loans allowed to individuals each year.
Literature from the group cites a 2016 study that showed $52 million in payday fees being charged in 2015 alone.
The group also cites a 2012 Pew Charitable Trust study showing that Oklahoma was the No. 1 user of payday loans per capita.
And because it is such a lucrative business, each year lobbyists come to the Oklahoma Capitol seeking even more relaxed laws on loan caps and percentage rates payday lenders may charge.
The group cited several such bills that had come close to becoming law in the last legislative session in 2016.
This year has been no exception.
VOICE announced at the news conference that they had prepared to oppose SB112, a bill by Sen. Dan Newberry, R-Tulsa. It would establish a new installment loan for no more than a year up to $1,500. Lenders would be allowed to charge 17 percent interest per month, which would come to 204 percent APR.
At the news conference, David Blatt, Director of Oklahoma Policy, a left-leaning think tank in Oklahoma, announced they had heard that Sen. Newburry would “not move ahead with the bill.”
But a check of the Senate’s website on late Wednesday showed the bill was still in place and had been through its first and second reading. It has been referred to the Business, Commerce and Tourism Committee.
Surprise ally
“I don’t think anybody in this state or this country would ever accuse me of being a liberal or a progressive or anything like that. I’m not,” said Rep. Kevin Calvey, R-Edmond. “I’m a very conservative Republican – very market oriented.”
He said that “from a free-market perspective” payday lending “is a problem.”
“Basically, what we are doing through government regulation is greasing the skids for these types of loans.”
He said that while free markets are a good way to “divide up God’s bounty among the people,” not everything can work well in a completely free market.
Calvey gave the example of there not being a free market allowed in “artillery pieces” or “heroin, or hit men.”
“Usurious rates of lending in payday lending are not for the purpose of helping people lift themselves out of poverty,” said Calvey. “It perpetuates poverty.”
Calvey’s HB1596 would create a database that all payday lenders would have to submit their data into. If that was in place, then the state could regulate how many payday loans each individual could have.
His bill would limit each individual to 90 days of loans per year.
He is joined by Rep. Mickey Dollens, D-Okla. City, whose HB1404 bill would limit the percentage charged on a payday loan to 60 percent rather than the current cap of 390 percent. Dollens is a former teacher who knew students whose parents were trapped by the payday loan cycle.
And when he was campaigning in for his south side seat this summer, he was surprised to hear how many people were concerned about the payday lending laws in the state and the impact they had on the poor.
Faith appeal
One of several pastors who spoke at the news conference was Rev. Dr. Mitch Randall, pastor of Northhaven Church in Norman.
Citing both Old Testament and New Testament Christian scriptures, Randall made a case that payday lending is “both unjust and evil.”Randall chose to refer to payday loans throughout his presentation as “predatory lending.”
He argued that payday lending “should be regulated heavily or abolished all together.”
“As a disciple of Jesus, when we fail to protect the poor from loan sharks swimming in our communities and the halls of our Capitol, then we are failing the poor. We are also failing Jesus,” said Randall.
