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Advocates say the public is with them on payday lending reform

By Deacon Kyle Eller 
The Northern Cross 

Supporters of payday lending reform, including representatives of the Diocese of Duluth and the Minnesota Catholic Conference, held a press conference in Duluth Aug. 17 to announce polling showing that an overwhelming majority of Minnesotans support their proposal — a 36% cap on interest rates — or even stricter limits.

Ryan Hamilton, government relations associate for the Minnesota Catholic Conference, addresses the media in Duluth Aug 17 in support of payday lending reform. (Deacon Kyle Eller / The Northern Cross)

Officials for Minnesotans for Fair Lending, a nonpartisan campaign focused on the issue, say that in 2020, the most recent year with accurate data, the average interest rate on payday loans in Minnesota was a whopping 208%, based on self-reported statistics from the payday lending industry to the Minnesota Department of Commerce. 

Speakers at the press conference described situations in which the global pandemic, coupled with rising costs for basic necessities, put pressure on vulnerable people who get stuck in escalating debt. 

“That financial duress can drive a family into the arms of a payday lender,” said Ryan Hamilton, government relations associate for the Minnesota Catholic Conference. 

Then with the high interest rates, the loans are so expensive they cannot be paid back. 

Hamilton said that the mere agreement between a lender and customer doesn’t make excessive interest rates right. “Minnesotans oppose this form of modern day usury,” he said. 

Speakers said it’s a problem throughout the state. 

“It’s a trap!” said Patrice Critchley-Menor, director of social apostolate for the Diocese of Duluth. 

She said payday lending “impacts our neighbors” within the boundaries of the Diocese of Duluth. For instance, in Duluth alone last year, 3,929 loans went to 348 borrowers, who paid $117,088 just in fees and interest. The average loan amount was $445, and the average interest rate was 226%. 

She said the poor should not be seen “as potential profit centers.” 

“When we focus our greed on those most in need, we are broken, and it’s going to take all of us to repair each other,” she said. 

Meghan Olsen Biebighauser, economic justice organizer for Minnesotans for Fair Lending, said efforts at the state Legislature to impose a 36% interest rate cap, a measure taken in 18 other states and the District of Columbia and already in place to protect military service personnel, have not yet been successful, to the point that even some cities, like Moorhead, are taking their own action. 

In nearby states, a South Dakota referendum passed with more than 75% of the vote in 2016, and Nebraska passed a referendum with 83% of the vote a little over a year ago. 

Asked about the difficulty getting the measure passed here, she said, “The payday lending industry in Minnesota has deep pockets.” 

However, polling presented by the organization, which was conducted by Emerson College Polling, suggests popular support isn’t an issue. The polling showed a dislike of the payday lending system throughout the state, across party lines, with common descriptors being “predatory,” “loan sharking,” and “scam.” 

The poll found that 60% of Minnesotans supporting limiting interest rates on payday loans to 36%, and that of the 15% who oppose the measure, the most common reason is that they believe 36% is too high. 69% of respondents favor increased regulation. 

Hamilton said the Minnesota Catholic Conference has been advocating on the issue for more than a decade and standing for policies that will truly strengthen families. 

Citing Pope Francis, who called families the fundamental building block of society, Hamilton said we have to make sure the family is supported or at least “held harmless.” 

“Minnesota can be a place where we have fair lending practices,” he said.