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Nebraska payday lending ballot campaign gets $485,000 boost

Posted at 11:39 AM, Nov 03, 2019
and last updated 2019-11-04 00:24:26-05

LINCOLN, Neb. (AP) — A ballot campaign seeking to tighten the cap on how much interest payday lenders can charge in Nebraska has received a major boost from a national donor, increasing the odds that it will succeed in placing the issue on the 2020 ballot.

Nebraskans for Responsible Lending received $485,000 in cash and in-kind contributions last month from the Sixteen Thirty Fund, a liberal, Washington-based group that has helped in other states with campaigns to expand Medicaid, raise the minimum wage and restrict payday lending.

“A lot of the early conversations we’ve had about fundraising have been positive,” said Aubrey Mancuso, an organizer for Nebraskans for Responsible Lending. “A lot of people get this issue, and I think we’re hopeful that we’ll have all the resources we need to succeed.”

Organizers are looking to cap the annual interest rate on payday loans at 36%, like measures that have passed in 16 other states and the District of Columbia. Colorado voters approved its cap last year, with most of the pro-campaign donations coming from the Sixteen Thirty Fund.

Current Nebraska law allows lenders to charge as much as 404% annually, a rate that advocates say victimizes the poor and people who aren’t financially sophisticated. Industry officials argue that the top rate is misleading because most of their loans are short-term.

In an email Friday, Sixteen Thirty Fund Executive Director Amy Kurtz said the group is “proud to provide support to the Nebraskans for Responsible Lending campaign to help end harmful predatory lending practices targeting working people in Nebraska.”

The group has been active in dozens of state-level campaigns for progressive causes, including political television ads critical of congressional Republicans.

The donations to Nebraskans for Responsible Lending were disclosed this past week in the group’s first financial filing with the Nebraska Accountability and Disclosure Commission.

Mancuso said the group has started collecting signatures and is using paid circulators, a major step toward getting the roughly 85,000 signatures they’ll need by July 3, 2020.

“We are just getting started, but we’re very confident we’ll have more than enough to qualify by the signature deadline,” she said.

The drive has also won support from a coalition that includes social workers, child advocates, advocates for the elderly and religious leaders. The other donors disclosed in the filing were Nebraska Appleseed and Voices for Children in Nebraska, both of which advocate for low-income families. Combined, they donated about $1,725 to the campaign.

“We see people almost every day with different financial problems,” said the Rev. Damian Zuerlein, a Roman Catholic priest from Omaha who is helping with the campaign. “So many of them are caught in a terrible cycle of not having enough to repay payday lenders. They have a hard time digging out.”

Zuerlein said payday lenders charge rates so high that he considers them a form of usury, a sin in many Christian faiths.

Former state Sen. Al Davis said he supported the campaign because payday lenders are essentially “taking food out of the mouths of children” by placing their parents in debt, and lawmakers haven’t done enough to regulate the industry.

“To me, it’s just wrong,” Davis said.

Industry officials say the measure would put many payday lenders out of business, forcing people out of jobs and driving customers to other lenders.

“People are going to continue to borrow money whether the state of Nebraska has (payday lenders) or not,” said Brad Hill, president of the Nebraska Financial Services Association. “It would close off a line of credit to people who don’t have any other way to pay for a car repair or to fix their air conditioner.”

Hill said Nebraska already has regulations that prevent borrowers from ending up in the kind of staggering debt seen in other states.

For instance, one type of transaction allows borrowers to write a check to a lender, who loans money in return and agrees not to deposit the check right away. Hill said Nebraska requires lenders to deposit such checks within 34 days, whereas other states allow lenders to hold onto the check longer and charge the borrower more fees, thus increasing their overall debt.

Hill said his organization plans to fight the ballot measure, but it’s not yet clear what they’ll do.

“Everybody hates payday lending except the people who use it,” he said. “Our customers vote with their feet, and people come back.”

But Mancuso said she’s confident that voters will opt to restrict payday lending, a step that state lawmakers have refused to take.

“While people can find a lot to be divided on lately, this isn’t one of those issues,” she said. “Nebraskans overwhelmingly agree that predatory lending needs to end.”