Even though voters overwhelmingly said no to payday-loan stores in the November election, an influential lawmaker said the industry likely isn't going away. Sen.-elect Russell Pearce, R-Mesa, said he believes the Legislature will give the industry an extension to stay in business.

"I believe in the free market," said Pearce, who is well-known for writing the state's employer-sanctions law as a state representative. "It's not our business to run a business out of business. . . . These are high-risk loans, and it's pretty unfair for us to tell you that you can't take out a high-risk loan."

Voters in November rejected Proposition 200, a ballot initiative financed and written by payday-loan companies to allow them to continue charging high interest rates on small loans. Had it passed, the measure would have allowed payday lenders to charge interest rates up to 391 percent and indefinitely extend their state licensing, which expires July 1, 2010.

If lawmakers don't extend the licensing date, the industry can charge only up to 36 percent annual interest, the maximum allowed for consumer lenders. A payday-industry spokesman has said stores can't survive on that interest rate.

Pearce said the issue did not belong on the ballot but before the Legislature, so there will be an honest debate. The payday-loan industry spent more than $14 million trying to persuade voters to pass Proposition 200 after lawmakers had failed to act on the issue in the past few years and the industry was in danger of going out of business.

Pearce, who will be the Senate Appropriations chairman, said some people need payday loans in a tight credit market. "We would hope people would make good choices, but sometimes that (payday store) is the only plan they have, and I'm not one to take that away from them," Pearce said.

Source:azcentral.com