Former Arizona Attorney General Grant Woods and HighGround execs Doug Cole and Chuck Coughlin are lobbying on behalf of Payday loans, an industry many consider to be unscrupulous predatory lenders due to excessive interest rates. All three men are advisors to Gov. Jan Brewer. To the surprise of many Capitol watchers, Woods’ name appeared as campaign manager on Brewer’s 2010 campaign filing documents earlier this month.
Last year, by a vote of 59.5% to 40.5% voters overwhelmingly rejected the industry-crafted initiative — Proposition 200 — to repeal the law putting the lenders out of business after June 30. The industry poured more than $14.7 million into the campaign while opponents had less than $1 million. Woods, Cole and Coughlin are trying to convince lawmakers to let the Payday lenders stay in business despite the public vote to the contrary.
Arizona’s usury laws cap interest on consumer loans at 36 percent a year. But industry lobbyists pushed through a special law in 2000 allowing them to charge fees that far exceed the cap for “deferred presentment transactions” of up to $500, writes Howard Fischer of Capitol Media Serices.
For example, someone who needs money writes a check for that amount plus the fee, which can be up to $17.85 per $100. The company agrees not to cash the check for up to two weeks. That amounts to annual interest of more than 450 percent. But when lawmakers enacted the law, they included a sunset clause: The law self-destructs July 1 unless renewed.