- Associated Press - Thursday, April 21, 2016

PHOENIX (AP) - Backers of a proposal allowing payday lenders barred from Arizona following a 2008 voter initiative to offer a new high-interest loan product launched a last-ditch effort Thursday to revive the legislation.

The new proposal includes sweeteners to a bill that narrowly passed the House but failed a Senate committee amid concerns from consumer advocate and religious groups concerned about predatory lending.

The amendments to Senate Bill 1316 adopted by a conference committee Thursday slightly lowers interest rates charged in the new “flex loan” product. Secured loans would drop by 2 percent to 13 percent a month and unsecured loans from 17 percent to 15 percent a month.

The proposal also would cut the maximum loan term to 18 months from two years and charge lenders a fee that will fund a new consumer education and low-interest loan account administered by the governor’s office.

Rep. John Kavanagh, the original sponsor of the proposal, said consumers with bad credit need the new loans, a common theme of lawmakers who back the payday lending industry.

“The bottom line is, if you’re the guy whose car transmission is broke and you haven’t got the cash and are going to lose your job, you’re going to be happy to have that money available,” Kavanagh said.

He also defended the new fee on lenders that will fund grants to nonprofit groups that provide emergency cash or no- or very low interest loans to the poor, saying it wasn’t a payoff.

The fee will be set by a division of the governor’s office headed by one of his appointees. The proposal allows the office to collect up to $1 million a year for ten years for the programs, which include consumer education.

“Up to $10 million is not thirty pieces of silver, and it’s quite frankly worth a zillion dollars to somebody whose house it saves, whose job it saves because they can get to work because of a loan,” Kavanagh said. “And there’s no requirement that these companies do any of this. I think this is a very nice gesture by the industry.”

Rep. Debbie McCune Davis, who has fought the proposal for two years, said the new proposal just isn’t serious.

“The idea that you would put a tax on lenders who profit from the poor in order to help the poor is disingenuous,” she said. “To me, it’s very clear that by reducing their interest a small amount they’re just desperate to get a footprint back in Arizona.”

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