Crowd lobbies at Miss. Capitol against small loan rate bill

April 2, 2012
By Cassandra Menkins

A small crowd gathered at the Capitol today to speak against a bill that would nearly triple the maximum interest rate on small loans.

Under House Bill 1396, finance companies could charge 99 percent interest on loans under $1,500. Mississippi law currently allows companies to charge up to 36 percent on loans of up to $1,000.

“When I first saw (the bill) come across my desk, I thought it was an April Fool's joke,” said Steve Castell, chairman of the Mississippi Religious Leadership Conference. “That we could go from 36 percent to 99 percent in the poorest state in the country is ludicrous and unbelievable.”

Castell added: “We've moved in this culture to a place where money is at its cheapest and now we're charging more to the people who are most vulnerable … This bill is faulty from the beginning and favors those who are in the business, not those who we hope our legislators seek to represent.”

Paheadra Robinson, director of consumer protection at the Mississippi Center for Justice, said the bill “would have a debilitating effect on families.” On a $1,500, 24-month loan, an individual now pays $2,241. If the bill passes, an individual will pay $3,389 for the same loan. The monthly payment will increase by $66.60.

To a struggling family, that means the difference between buying gas or paying a utility, between groceries and paying for child care,” Robinson said as members of Mississippians for Fair Lending looked on. “These are not options we want our families to face.”

According to the state Department of Banking and Consumer Finance, 517 small loan companies are licensed to work in Mississippi.

Members of the Senate Banking and Finance Services Committee are expected to vote on the bill Tuesday. Chairman Gary Jackson recently told The Clarion-Ledger the bill could die in committee if it doesn't have strong support.

Tuesday is the deadline for Senate committees to consider bills that have already passed the House, and for House committees to consider bills that have already passed the Senate.