The Voice of the Poor Committee (VOP) in the Diocese of Phoenix has a very long history with advocacy regarding Predatory Lending. It was one of the first issues I worked on, when I joined VOP many years ago. At that time, the most common type of Predatory Lending in Arizona were the infamous Pay Day Loans.
Prior to 2008, the Pay Day Loan industry operated in a separate carved-out section of the Arizona Statutes, which was created by the Arizona Legislature as a trial measure with a 10 year sunset provision, which would run out in 2008, with the anticipation that a future legislature would be willing to allow the program to continue indefinitely.
In 2007, a bill (SB 1446) was introduced to eliminate the sunset provision. Following a lengthy battle by SVDP, in partnership with a significant number of other Health and Human Services (HHS) Non-Profits, SB 1446 did not pass.
But anyone, who ever dealt with this industry, knew that they were down, but surely not defeated. In 2008, the industry gathered enough signatures to get the issue on the ballot. SVDP and its HHS NP partners swung back into action to defeat Prop 200. The result of our work was amazing. Prop 200 was overwhelmingly defeated 1,271,717 to 860,607. On July 1, 2009, the legislation, allowing Pay Day Loans, expired and most Arizonans thought we were done with Pay Day Loans. Instead, over the next few years, Arizona was invaded by a variety of other Predatory products including title and signature loans, which although predatory were relatively insignificant when compared to Pay Day Loans.
In 2015, a new bill, HB 2611, was introduced in the Arizona legislature, under the name of “Consumer Flex Loans”, attempting to authorize a new product, which was actually much worse than a Pay Day Loan. With current Arizona law limiting interest rates at 35%, the new product was set-up as an open-ended line of credit with huge fees, such as the daily fee of ½ of 1% calculated daily, among others. This would have resulted in a cost for the borrower in excess of 215% of the original loan amount.
Both the Phoenix and Tucson Diocesan Councils worked together with their respective allies in an all-out effort to defeat the bill. They experienced an initial setback, when the bill passed the House of Representative by one vote. But, our coalition did not give up and continued to bring the fight to the Senate where the bill was eventually pulled from the last committee scheduled to hear the matter. This effort included regular Action Alerts by both Councils asking our members to call/meet the representatives of their district and especially to contact personally the key decision makers. We believe that that the bill was pulled when the sponsors became aware that they did not have the votes necessary to forward the matter to the Senate, as a whole.
Although the Arizona Legislature has adjourned for this session, we anticipate that some form of Predatory Lending will be introduced again when the legislature comes back in January 2016. We are not waiting for the legislature to reconvene, but we are already meeting and making plans to be ready to defeat any predatory loan product, which might be introduced.
The Phoenix VOP Committee has advocated with other HHS Non-Profits for years. Many of the people who come to SVDP for assistance also access other agencies for services. Our partners included Arizona Association of Food Banks, Arizona Community Action Alliance, Arizona Interfaith Council, Catholic Charities, Children’s Action Alliance, Protecting Arizona’s Family Coalition, Southwest Center for Economic Integrity and many more. We have learned that truly there is strength in numbers. The strategy paid off. For HB 2611, we learned that legislators were inundated with calls and e-mails from Vincentians and members of our partners.