Arkansas booted payday lenders from the state. Guess what happened next?

Attorney General Dustin McDaniel said today his office has obtained court orders barring two online payday lenders from engaging in prohibited lending activities in Arkansas.

It sounds like the good people of Arkansas want access to short-term credit.

Arkansas is working on a small loan bill, even though the Attorney General is strongly against any of the proposed measures. This is the same AG who proudly booted payday lenders from the state, and then took a stand against online lenders when consumers sought loans on the Internet. It sounds like the people of Arkansas wants access to small loans.

House Bill 1846 by Rep. Jon Woods, R-Springdale, received a “do pass” recommendation from the House Insurance and Commerce Committee and advances to the House. The bill would set regulations for businesses offering loans of less than $5,000.

Woods said the bill would not allow companies to charge interest rates or fees exceeding the state’s maximum interest rate of 17 percent. He said it would not open the door to the return to Arkansas of payday lenders who charge exorbitant interest rates and fees.

Woods also is the sponsor of HB 1572, which would allow the Legislature to raise the maximum interest rate on small loans. Sen. Michael Lamoureux, R-Russellville, has filed a mirror bill in the Senate.

Attorney General Dustin McDaniel opposes all three bills

Arkansas essentially banned storefront lending last year.  Guess what?  Consumers go online for loans.

Should people vote for someone who works to limit credit and destroy jobs?

When payday lending stores close, consumers go to the Internet to look for short-term loans.

If you ban brick and mortar stores, payday loan customers will seek loans on the Internet.  From a story out of Arkansas:

Although brick-and-mortar payday lending stores have been chased out of Arkansas, Attorney General Dustin McDaniel says another threat persists: short-term, high-interest loans offered over the Internet.

McDaniel says his office has sent about 30 warning letters to so-called payday lenders who have loaned or offered to loan money to Arkansas residents over the Internet.

The last payday lending chain in the state closed all its stores on July 31, ending a decade in which the businesses flourished under a loophole created by the Legislature. The state Supreme Court ruled the loophole unconstitutional last year and the state attorney general’s office filed lawsuits to force the businesses to close.

Officials say the state has not ruled out taking the Internet lenders to court, though no lawsuits have been filed yet.

I don’t think that this WalletPop article actually makes an argument that lives up to the title of the piece, but I do always appreciate their reliably one sided reporting.

While so-called consumer groups celebrate their “victory,” are they also trying to find ways to provide Arkansas consumers with affordable short-term credit options? Doh! Clearly WalletPop and the “consumer” groups are forgetting something in Arkansas.

People are out work and consumers have had their financial choices limited.  So, obviously payday lending critics are celebrating.  From the story:

Opponents of payday lending celebrated what they say is the end of the high-interest loan business in Arkansas.Opponents gathered in front of a shuttered payday lending store Tuesday in southwest Little Rock to speak with reporters. They said First American Cash Advance, the last payday lender in the state, closed all its stores on July 31.

Hard to tell.  From the Las Vegas Review Journal:

Community One Federal Credit Union offers a similar program to help members who have borrowed from payday lenders. Community One offers 30-day loans for $300, $500 and $700 with a fee of $15 per $100 loaned and an 18 percent annual interest rate, or about 1.5 percent for the 30-day loan period.

About 2 percent of Community One’s 21,000 members take out a PayDayCHOICE loan occasionally, said Jerrold Rosen, vice president of marketing.

To qualify, a member must have $1,000 in monthly income, must have been employed continuously over the past six months and be 18 or older. The program is available to individuals with direct deposit of checks after 30 days of membership.

To get an AdvancPay loan from Nevada Federal, the borrower must be employed and must not be in default on an existing payday loan. The credit union doesn’t do a credit check.

It’s a 30-day loan with both fees and interest so the Payday Pundit is having trouble doing an apples-to-apples comparison in his head.  Maybe I haven’t had enough caffeine yet.

The guy who successfully sued payday lenders in Arkansas was named the state Democratic Party chairman.