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.