Star: Brandom's Payday Lending Bill is "Transparently Bogus"

In this weekend's Capitol Watch editorial:

You call this reform?

A bill ostensibly curbing payday lending practices in Missouri finally made it out of a legislative committee. Unfortunately, it’s about as effective as fighting a brush fire with a shot glass.

Rep. Ellen Brandom’s bill, which has cleared the House Financial Institutions Committee, is a short-term lender’s dream. It caps the annual percentage rate on a loan at a mere 1,564 percent, down from the current cap of 1,950 percent. And instead of six rollovers on loans, as Missouri law currently provides, lenders would be restricted to three measly loans.

The lending industry is putting up a token protest. In private, one can picture lenders dancing for joy.

As it stands, the average borrower in Missouri who seeks a short-term loan ends up paying an annual percentage rate of 444 percent. So a cap more than three times that amount is essentially meaningless. Plus, no surrounding state allows rollovers. Neither should Missouri.

It’s unclear whether the full House will take up the bill sponsored by Brandom, a Republican from Sikeston, or whether the Senate will weigh in with something less transparently bogus.