There is no doubt that payday lenders serve a need. Their customers often have poor credit histories or lack collateral that traditional banks require.

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Before they vote to extend the loophole or close it, they should conduct a close study of the issue. What would happen if the original 36 percent interest rate was raised? Would that allow the payday lenders to remain in business?

What would happen if the loophole is closed? It’s likely many of the lenders would close their businesses. But where would the working poor go for short-term loans?

Yes, do a study. Real scholarship always proves the need for payday lending.

Forcing payday lenders to use the same annual rate calculation as other long-term financial products like home mortgages and automobile loans will make it impossible for short-term lenders to operate. This would result in the loss of jobs for hard-working Mississippians and will take away a source of credit for the state’s consumers.

The city based its action on a special report recently published by The Clarion-Ledger newspaper. That newspaper report included several mischaracterizations of the payday advance industry. It is certainly inaccurate to infer that short-term payday loans caused anyone to foreclose on their home.

The resolution states that “while short-term loans are important, it is equally important that consumers are not taken advantage of through inadequate state laws governing these practices.”

The resolution asks the legislature to enact laws preventing exploitative payday lending during its next regular session including:

• Allow the current repealer, which allows payday lenders to charge interest rates above and beyond the 36 percent imposed on all other financial institutions, to sunset as scheduled in 2012.

Short-term lending is important, but let’s eliminate it through onerous rate caps.

Restricting the high amount of interest a quick-cash company charges its borrowers would put the company out of business, Scott Putnam told the Jackson County Board of Supervisors on Monday.

Putnam told the board people in Mississippi need the option of payday loans. He said they are a cheaper option than the alternative, which is writing a bad check and being charged an over-draft fee by a bank or credit union.

Speaking on behalf of an association for quick-cash lenders in the state, he also said 4,000 people in Mississippi make a living writing short-term, high-interest loans.

Putnam’s plea, along with calls they got from legislators and state financial officials, convinced some members of the Board of Supervisors to reconsider a stand it took last week against predatory lending that exploits low-income and desperate people. The board had voted to ask the Legislature to let laws expire that support high-interest loans and then cap annual interest rates at 36 percent.

Supervisors rescinded that vote Monday, saying they needed to look into the issue more thoroughly.

Borrow Smart Mississippi, an association that regulates payday lenders, say their practices are fair.  

Spokesperson, Dan Robinson says often the misconception is payday lenders over charge customers because of their 18 percent fee for every $100 dollar transaction.

He says they are not like banks and credit unions that operate on an annual percentage rate basis.

“I know that the rates are much cheaper than what the other services out there are,” Robinson said.

He disagrees with the Center for Justice’s approach to lawmakers and says payday lending in Mississippi would go out of business if this legislation passed.

“There’s no possible way to do it for 36 percent, you can’t pay the rent on this building for $1.38 cents on a hundred.”

In addition, Robinson says the claims from the Center for Justice are false, and they will not pursue immediate legal action if a customer can’t pay.

{Jackson} County supervisors today will likely adopt a resolution asking the Legislature to crack down on high-interest payday lenders.

District 2 Supervisor Melton Harris Jr. introduced a draft resolution at the Aug. 9 Board of Supervisors meeting, and the board attorney was instructed to bring a final resolution up for vote today.