Montgomery city councilmen seek moratorium on payday lenders
MONTGOMERY, AL (WSFA) - The future of payday and title loan businesses in Montgomery is uncertain because of an item on the city council's agenda Tuesday.
There's been concern for years about the extremely high interest rates many of the loan businesses are charging. Now, two city councilors say it's time to take action.
There was direct opposition to the councilors' measures. Three city council members voted against suspending the rules, which means because it is considered new business, it would not get a vote Tuesday.
Councilmen Richard Bollinger and Charles Smith are proposing a temporary moratorium on business licenses for what many call predatory lending agencies. The first opposition came during the council's work session as Councilman Arch Lee, who lobbies for the businesses, said it was simply unfair.
"What don't you like about it?" Councilman Lee asked. "In my opinion, if it's science then we need to address science. If you don't like payday lending, you need to go up the street to the Statehouse and argue it with the legislature," Lee added.
According to Councilman Charles Smith, nearly twenty payday and title loan businesses line the Atlanta Highway from Ann Street to the Eastern Boulevard. For Smith, that's too many.
"If you see 18 of them on a main thoroughfare going into our city, it makes you think that the people who live around here must be desperate."
Smith says he's not discriminating against the industry. He is simply asking the city to impose a moratorium on new business licenses until it can study the impact payday loan companies are having on the local economy.
"Back off from this a little bit," Smith says. "Give us some breathing room, not trying to put anybody out of business, but we need to think through do we want more and more and more of this?"
The Alabama Legislature attempted to pass laws to regulate the industry during the last session, to protect consumers who reportedly pay on average 300 percent interest on the loan over the course of a year.
"nobody in their right mind would borrow."
The legislation was met with opposition and died in the legislature.
"We have definitely given a service for a lot of people, honestly, that didn't know what other way or direction to go," said a supporter of the loan stores.
According to Smith, there's nearly 100 short-term loan businesses in the city of Montgomery.
The council will likely vote on the issue during the next meeting on September 3.
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