Editorial: Whose interest in mind?

Friday, June 1, 2007 | 6:53 a.m.

A b ill to limit the terms of high-interest payday loans hit a snag this week in the governor's office, despite garnering near unanimous support in the Legislature.

Assembly Bill 478 is a housekeeping bill to close loopholes in the 2005 law that prohibits lenders from charging triple-digit interest rates and suing people who default on loans for three times the amount they borrowed.

However, a group of lenders has squirmed out from under the law by offering loans on an installment plan and by not taking postdated checks from consumers. By doing so, they can - and do - charge excessive interest rates, some as high as 900 percent over the course of a year.

AB478 would still give the lenders plenty of room to profit. Loans charging more than 40 percent interest would have to be paid back within 35 days. If the borrower could not do so, the interest rate would drop to the prime rate plus 10 percent, or 18.25 percent in today's market.

That apparently is not enough for these lenders, who want to continue to exploit the poor. They have someone in the governor's office who is willing to listen.

On Wednesday Melissa Subbotin, Gov. Jim Gibbons' spokeswoman, told the Associated Press that the governor's office had been contacted and "there have been talks about a possible veto." Military members often are targeted by these legalized loan sharks, so we would think Gibbons, a retired military pilot, would be empathetic to the borrowers' plight.

However, Gibbons had not made up his mind, Subbotin said, noting that there had been "significant discussions and arguments both to sign and to veto" the bill.

Really?

The Assembly passed the bill unanimously. The Senate voted 20-1. The 2005 bill passed both houses unanimously.

The only discussion at this point should be whether to sign in black or blue ink.