In bill veto, Oklahoma takes a stand against loan sharks

Money roll Credit Zack McCarthy via Flickr CC BY 20 CNA 7 28 15 Zack McCarthy via Flickr (CC BY 2.0).

The governor of Oklahoma vetoed a bill that would have drastically increased the interest rates of payday loans, joining the fight of the bishops around the country who have pushed back on similar legislation.

"House Bill 1913 adds yet another level of high interest borrowing without terminating or restricting access to existing payday loan products," Governor Mary Fallin said in her veto statement last week.

The bill was vetoed May 5, with Fallin voicing her concern that the loans created by the bill would be "more expensive than the current loan options."

Bishops throughout the U.S. have decried the use of payday loans, and have backed legislation which would restrict the effect these loans on have on the borrowers – communities who are often targeted for their lack of education and immediate need. Catholic Charities has even opened organizations which may assist those in need or struggling with high interest loans.

Payday loans are a small amount of money with a high interest level. Often times these loans are taken out for situations such emergency doctor appointments or car troubles. The name of payday loans derives from the understanding that the loan would be paid back within the next paycheck, but the high interest rates usually suffocate the costumer who is struggling to make ends meet.

Payday loans have led people into a circular trap in which they can only pay the high monthly interest or roll over fees continue to add up and become unmanageable.

HB 1913 would mean that loan companies could increase the monthly interest rate to 17 percent, which is three to four times greater than Oklahoma's current laws. The annual percentage rate would be about 204.

According to, in 2014 nearly 950,000 dollars was taken out in payday loans and 1.2 million in "B" loans, averaging 77 loans per 100 Oklahoman adults.

Bishops and Catholic leaders throughout the U.S. have fought similar legislation like HB 1913 and backed bills that restrict loan sharks.

Regulations have been passed in order to limit the amount of times lenders are allowed to charge borrower's fees or how many times loan companies can access a person's bank account before overdraft fees stack up. Legislation has also been passed that enforced lenders to evaluate whether the borrower has sufficient means to pay back the loans.

These loans will affect people in the middle-class, but they are well known to be marketed towards people who may not understand the full consequences.

In a 2015 interview with The Dallas Morning News, the pastor of St. Joseph Catholic Parish in Arlington said "it seems that every week another member of my parish tells me a horror story about one of these loans. They debilitate our families. People take out loans without fully understanding the terms."

The Texas Catholic Conference analyzed the situation across the state, talking to both lenders and borrowers. Jennifer Allmon, associate director of the Texas Catholic Conference, said that the stores were located in areas where a loan may be more attractive or that the lenders misled borrowers with misinformation.

She said the contracts will often only be in English, but advertising and conversation in the shop would be conducted in Spanish "so oftentimes the borrower has no idea what they're signing," and the interest rate would be significantly hirer than what the borrower had expected.

The Kansas Loan Pool Project, in a partnership with Sunflower Bank, has assisted over 120 people who have struggled under predatory debt, and $80,000 has been refinanced since its establishment in 2013. The program provides the borrower with a more traditional loan in order to cover the payday loan. Then they will help the person develop the financial skills to budget to pay back the lower interest loan.

Catholic Charities in Kansas has also begun a program in order to provide small, low interest loans, with a maximum of a $1000, so that people who do have an immediate need are able to receive the proper funding.

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