FOR THE MISSOURI HOUSE OF REPRESENTATIVES
FINANCIAL INSTITUTIONS COMMITTEE

Hearing March 9, 2011

My name is Barbara Finch, and I am one of the founders and past president of Women's Voices Raised for Social Justice in St. Louis. This organization numbers more than 500 members and friends. I am writing to the committee on my own behalf, as well as for other members of this organization.

In February our organization had a program on payday lending and we learned a lot. We learned that Missouri has more payday lending outlets than any other state in the union. Why? Because it is so very lucrative for lenders to set up shop in Missouri. We learned that Missouri allows the highest APR of any state in the union....up to 1,950 percent. The average APR paid by Missouri borrowers is 440 percent. Why is this rate so high? Because Missouri has done nothing to regulate or control this industry.

Now, the members of my organization...and I daresay members of this committee...would not go to a payday loan shop if we needed to borrow a small amount of money. You and I would go to a bank or a credit union. But you and I do not represent the typical payday loan customer. While payday loan borrowers do have checking accounts, they are not required to have money in those accounts. Contrary to some allegations, borrowers are not required to have jobs. Many payday loan borrowers live on Social Security or disability payments. Banks and credit unions have done a terrible job of providing programs and services for these low-income individuals. So, with nowhere else to turn, they turn to the payday lender..which, in small-town and rural Missouri, is usually right down the street.

When borrowers make this turn into the payday lending outlet, they begin a downward spiral into a cesspool of debt. Fees and interest rates are sky-high. They can't pay off the first loan, so they renew...incurring even more debt. Their burden becomes greater and greater and the system becomes more and more coercive. Millions of Missourians have been trapped in this cycle (according to the St. Louis Business Journal, 2.43 million loans were made by payday lenders in Missouri last year. The average APR was 444 percent).

Missouri legislators have a chance to correct this abusive, immoral, usurious practice. Rep. Mary Still has filed HB 132, which would cap the allowable interest rate at 36 percent. This is the top rate allowable in loans to military families...a rate that was secured by then-Senator Jim Talent when he served in Congress. Rep. Still's bill would also limit the number of times a loan can be renewed. It would require greater disclosure of fees. It would greatly benefit those who use payday loans to meet small, unexpected expenses.

Another bill under consideration would limit the APR to 1,500 percent. This would do absolutely nothing to correct the abuses that are rampant in the payday lending industry.

I encourage members of the House Financial Institutions Committee to take this opportunity to support Rep. Still's bill. The current payday loan situation in Missouri is immoral and unacceptable. It is bad public policy and leads to long-term debt for Missouri residents.

We can, we should, and we MUST do better for our citizens.

Thank you.


Barbara L. Finch
Co-founder and Past President
Women's Voices Raised for Social Justice, St. Louis
505 North and South Rd.
University City, MO 63130