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Gov. Nixon vetoes payday loans bill, saying it won’t protect borrowers from debt spiral

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KANSAS CITY, Mo. – Missouri Governor Jay Nixon vetoed Senate Bill 694 on Thursday, saying it was false hope for true reform of payday loan company policies.

The bill would, in some cases, cap the interest rate at 35 percent for borrowers. However, on short-term loans the interest rate would skyrocket.

On a 14-day loan, the interest rate would be allowed to increase to more than 900 percent if it's stretched out over one year. The bill would also allow borrowers to get multiple loans from multiple companies at once.

For those reasons, Gov. Nixon called the bill a sham effort and said it won't protect Missourians from the downward spiral into debt.

Metro man Elliott Clark, who lost his home after taking out payday loans, applauds the governor's decision, while the bill sponsor says this bill was at least a step in the right direction.

Smoking ribs and getting ready for a family reunion, Clark is totally in his element. For him, taking care of his family is priority number one.

"My pride would not let me let my family do without. Nobody in their right mind does," he said.

Clark has children he sent to college, he's a Marine, a Vietnam-era veteran, and he was happy with his simple but good life.

"We were doing okay until my wife fell and broke her ankle in three places," he explained.

Thirty-five thousand dollars in medical bills forced him into seeking about $2,500 in payday loans.

"Over the course of five years, that's how long I had these loans, I wound up paying $30,000 in interest," he said.

Clark spoke out against current payday loan policies, and he supports Gov. Nixon's veto of Senate Bill 694.

The bill would prohibit payday lenders from giving multiple loans to the same person, unless that person went to several different companies. The governor said that would only prolong the cycle of debt.

Senator Mike Cunningham, a Republican from the Springfield area, sponsored the bill. He says it capped most interest rates at 35 percent, as reform advocates wanted. Senator Cunningham says the bill also would have allowed borrowers to have an extended payment plan for their first loan from a company, which he believes would have helped.

But Clark says the bill wasn't strong enough to protect people like him, just trying to do the best he can.

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4 comments

    • Wayne

      Most companies are willing to work with you because they want their money as well. You just have to stay in communication with them and usually they are willing to setup reasonable payment plans and work something out.

  • Westco

    The vast majority of these folks work, sometimes two or more jobs, and they still need a payday advance. Add to that an extremely limited access to credit and banking services… That’s where we need to focus refoms. We can legislate these lenders out of the state, but those problems remain.

  • EdTurlti

    While this kind of bill does not eliminate the spiral of debt people see with these kinds of loans, it definitely would help a little. Payday loans in Edmonton have started to regulate loans and the amount a lender can charge in interest as well as NSF fees, and these kinds of regulations are really a step in the right direction. Even if you cannot stop people from taking out these kinds of loans (because lets face it, they are in high demand just look at all the storefronts around) you can make sure they are not being taken advantage of they way they are with states that do not have any regulation in place.

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