Arizona vote proposal would end interest rate limits

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Lenders operating in Arizona would have no limits on how much they could charge for interest rates under a voting measure introduced last week

The Economic Freedom Bill would ban mandatory limits on the prices of most private transactions.It would also limit future increases in the state’s minimum wage.

“The hallmark of a free society is the capacity of autonomous individuals to decide for themselves whether and under what conditions they wish to carry out transactions in goods, services or money”, the text of the amendment reads. proposed constitutional. The proposal “would prohibit the government from dictating price terms in transactions between individuals.”

Supporters of the measure, put forward by Arizonans for Financial Freedom and sponsored by a group called the National Credit Alliance, are expected to collect nearly 356,500 valid signatures by July 2 to qualify for the November 2020 ballot.

Conservative groups including American Encore and the Arizona Free Enterprise Club are also backing the measure, and other organizations are likely to follow, said Sean Noble, campaign manager for the initiative.

Noble called the initiative an effort to “plant the flag of free markets” at a time when socialism has drifted into the mainstream political arena.

It would not apply to payday loans, which are currently not permitted in Arizona, nor to taxes, fees, or most assessments imposed by government entities.But that would bar future hikes in the state’s minimum wage after the expected hike to $ 12 an hour from January, outside of annual inflation adjustments thereafter, Noble said.

Conflict with another proposition

As a constitutional amendment, this measure, if approved, would likely nullify another proposal, called the Arizona Fair Lending Act, which would cap interest rates on auto loans.

The National Credit Alliance does not have a website, although a document from ProPublica indicates that the group is affiliated with the Financial Service Centers of America, which did not respond to a survey. Members of this group engage in check cashing, bill paying, payday loans and other services.

Arizona Fair Lending Act supporters are looking to collect more than 237,000 signatures to put the measure on the 2020 ballot. This comes 11 years after the Arizonans defeated Proposition 200, which would have extended payday loans indefinitely. An enabling statute expired two years later, ending payday loans here.

Possible limits on auto-title loans

Auto title loans allow vehicle owners to borrow against the equity in their cars and trucks, using their vehicle titles. Critics say the loans charge annualized interest of up to 204%. The Arizona Fair Lending Act would not ban lending, but would cap interest at 36%, ban lump sum payments, and restrict other practices.

Arizona Fair Lending Act spokesperson Rodd McLeod described the Economic Freedom Bill as “a drastic grab of money by out-of-state payday lenders” who were defeated earlier in their attempt to expand payday loans. According to the latest proposal, “businesses can charge whatever they want,” he said.

And Tomas Robles Jr., co-executive director of LUCHA, an organization that supported the minimum wage ballot measure, said the new proposal was part of a familiar effort.

“The Economic Freedom Act is another corrupt attempt to reverse the (the) increase in the minimum wage approved by voters, and we will continue to fight for the family wage and fight those who seek to put power in between. the hands of special interests and away from the everyday. Arizonans, ”Robles Jr. said in a prepared statement.

The measures to amend the Arizona constitution have a higher signing threshold than the other proposals.

Contact the reporter at [email protected] or 602-444-8616.

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