Missouri House Bill 132 stifles free market competition

A rolled-up dollar bill sitting upright on a table.

Under House Bill 132, a Missouri payday lender would make less than this for every $100 loaned to a customer. (Photo Credit: CC BY/MoneyBlogNewz/Flickr)

In her campaign speeches, Missouri Rep. Mary Still claims that she supports a free market economy. However, as Payday Pundit points out, Rep. Still’s stance on Missouri House Bill 132 – yet another state piece of legislation that would place an industry-killing cap on payday loans – is inconsistent with free market competition. Rep. Still is endorsing the bill on behalf of the “young working people” in alleged danger of being fleeced by a financial bogeyman.

The dangers ‘financially unsophisticated’ Missourians face

According to Rep. Still, payday loan companies “prey on young working people” who allegedly lack the sophistication to avoid being taken to the cleaners by financial predators. Clearly, Mary Still isn’t aware of the most recent research regarding the payday loans industry – research that disproves dramatic claims that payday lenders are predatory and unregulated by bodies that protect consumers from excessive rates and dishonest business practices.

It appears what’s really bothering Rep. Still is that some Missouri residents take payday loans from out-of-state lenders. This means that Missouri isn’t getting its cut of the money. That appears to be what Rep. Still wants – a cut for the “Show Me” (the money) state.

What Missouri House Bill 132 requires

HB 132 proposes several reasonable policies that would protect Missouri payday loan customers from being taken advantage of. But in a move that would shut down payday lenders, House Bill 132 requires the following payment term, rate cap and fee schedule:

“A lender shall give a borrower a minimum of ninety days to repay a loan. A payment shall be required every two weeks so that the loan will fully amortize in ninety days… A lender may charge and receive on each loan interest at a simple annual rate not to exceed thirty-six percent… A lender may charge a loan set-up fee equal to five percent of the loan up to a maximum of twenty-five dollars.”

As Advance America Director of Public Affairs Jamie Fulmer told the Missourian, no payday lender could afford to operate under such terms and employees, landlords, insurance and more. This bill would would cost Missouri jobs.

“If you apply 36 percent APR on a two-week loan, it breaks down to $1.38 we’d charge to loan someone $100. That would break down to less than 10 cents a day,” said Fulmer.


Columbia Missourian

Missouri House Bill 132

Payday Pundit

Meet Missouri Rep. Mary Still

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