This Is News: Steve Beshear Supports Payday Loan Cap.

Beshear backs payday loan cap
By Deborah Yetter

Gov. Steve Beshear Tuesday announced his support for a 36 percent annual cap on the interest that Kentucky’s payday lenders may charge consumers for the short-term, high-cost cash loans.

“Thousands of Kentuckians who have fallen on hard, economic times are trying to find short-term means by which they can put food on the table for their families,” Beshear said. “A rate cap would be a strong protective measure we can take on behalf of consumers.”

A coalition of religious leaders and consumer advocates last week called on the 2010 General Assembly to pass a law limiting payday lenders to the 36 percent cap Congress imposed in 2007 on payday loans for military personnel.

Members of the group called Coalition for Responsible Lending said they are seeking a sponsor for the measure, which failed in last year’s legislature after payday lenders fought it.

Kentucky has about 743 payday lenders who offer two-week loans and charge up to $15 per $100, or $75 for the maximum $500 loan allowed under law. Consumer advocates say the interest rate adds up to more than 400 percent a year for people who take out repeated loans.

But payday lenders defend the loans as a service to people who may need cash in an emergency and plan to oppose the cap.

“A cap on payday transactions will drive lenders out of business,’’ said Tres Watson, spokesman for Community Financial Services Association of America. “We hope the governor will look past the falsehoods peddled by our opponents and reconsider his decision.”