Arkansans have repeatedly affirmed at the ballot box that they oppose predatory lending. Amendment 89 to the state Constitution caps interest rates at 17 percent, and in 2008, Attorney General Dustin McDaniel forced payday lenders to leave the state.
But two Arkansas legislators — Rep. Michelle Gray and Sen. Bart Hester — are trying to make it easier for predatory lenders to operate in Arkansas. State Sen. Jason Rapert, meanwhile, is trying to shut them down.
Within the past couple of years, one company, CashMax, has set up shop in the state, charging up to 280 percent interest on loans, as calculated under the federal Truth in Lending Act guidelines. The company calls the usurious rate “fees,” which, it says, are allowed under Arkansas law.
Gray’s measure would let “credit services organizations” offer guaranty services, for a fee amounting to interest rates far higher than 17 percent. Hester’s bill would allow fees on top of interest.
Rapert, however, has proposed Senate Bill 658, which would prohibit such fees. “The state of Arkansas has been very clear that predatory lending is not welcome in our state,” he said. “That meant the closure of what has been known as payday lending entities across the state and a stop to the predatory lending practices that we had seen happening — preying on poor individuals, down on their luck.”
Missing in action has been our current AG, Leslie Rutledge, who has been silent on the issue, despite receiving a complaint about CashMax months ago. And in January, state Sen. Jane English asked Rutledge for an opinion on whether CashMax’s fees count as interest. So far, there’s been no response from the attorney general’s office.
We support Rapert’s effort to fight predatory lenders and hope that Rutledge lends the proper legal support to the battle.