Morrison to seek new restrictions on payday loans

? Saying their industry takes advantage of the poor and the vulnerable, Attorney General Paul Morrison promised Friday to push for new restrictions on payday loan companies.

Morrison announced that he’ll convene a daylong “round-table discussion” on payday loans and check-cashing businesses, with an eye toward lower limits on what they’re allowed to charge consumers who take out small, short-term loans.

To lead the discussion, he appointed Holly Petraeus, the wife of Fort Leavenworth’s commanding lieutenant general, who led a push for restrictions on payday lending to soldiers. Morrison said he hopes to have proposals for the Legislature to consider before it adjourns its session in late April or early May.

“We think we know the direction that we need to head, and we’re just going to get these heads together, people who know about a lot about this issue, to make some recommendations,” Morrison said during a news conference.

Whitney Damron, lobbyist for the Kansas Payday Loan Association, said he wasn’t aware of any problems within the state and that rates charged by its companies typically are lower than those in surrounding states.

“A payday loan is a straightforward loan that the consumer understands,” Damron said. “You find few complaints to the state banking board.”

State law limits payday loan companies to charging a 15 percent fee. However, the typical loan – between $100 and $500 – lasts only two weeks, making the actual annual percentage rate charged up to 400 percent.

Morrison said borrowers often have trouble paying back their loans quickly, and they keep rolling them over – and often take out new loans.

The attorney general said he probably wants to target businesses that make loans against car titles and consider limits on overall annual percentage rates. Other states have stricter regulations, he said.

“Kansas is literally becoming a mecca for a lot of these businesses, because it’s easy money,” Morrison said. “They’re popping up everywhere.”

Last year, Congress capped the annual interest rate on payday loans to military personnel on active duty and their dependents at 36 percent. It also prohibited the use of vehicle titles as collateral.

“They did pass terrific legislation,” Petraeus said. “It shouldn’t just be limited to the military community to be protected from this sort of lending.”

Damron said the Kansas association has been supportive of protections for the military, such as stopping fees if a soldier is deployed.