Attorney General Dustin McDaniel appears to be satisfied that payday lenders are heeding his demand that they stop usurious lending. But are they?
McDaniel, who had threatened to sue companies that continued to lend at more than the constitutionally permissible rate of 18 percent, had sent letters to companies representing 156 payday-lending locations. He said today that 52 companies had advised him that they will “comply with the laws of Arkansas” at all their locations and that another seven had ceased operations. But do the “laws of Arkansas” include the state Constitution, as it is rigidly interpreted by the Supreme Court? McDaniel said that “in the coming days and weeks” he would try to ensure the accuracy of their representations.
Meantime, the lenders opened a counteroffensive. If the payday lenders leave Arkansas, they ask, how will needy people obtain loans for emergencies? (Will they have to get by until the next payday as they did before the check cashers moved in a decade ago?) They cite a New York federal bank study and other sources that concluded that the other remedies — bounced checks, bankruptcy, overdraft protection, credit-card late fees and offshore payday advances — were far costlier than the typical 391 percent interest charged by payday lenders.
By fall, the Arkansas Supreme Court should settle matters with some finality.
McDaniel’s press release and that of the Arkansas Financial Services Association are on the jump.