About Time (Editorial)

The ruling in November by the state Supreme Court declaring the Arkansas Check Cashers Act unconstitutional was long overdue.

We applaud the six justices for their decision, long overdue as it was.

The act that allowed the payday lenders to make loans at triple-digit interest rates that far, far exceed the state’s 17 percent usury limit was blatantly unlawful.

A lobbying effort by the check-cashing industry managed to get the measure through the state Legislature back in 1999. Newly elected Attorney General Mark Pryor, who had received coordinated campaign contributions from the check-cashing lobbyists, let it ride. In fact, he wouldn’t let concerned assistant AGs warn lawmakers that the bill was unconstitutional.

Attempts to overturn the law, both in court and in the legislature, proved unsuccessful until November’s ruling by the Supreme Court. That ruling reversed a Pulaski County circuit judge’s decision that the law was constitutional after justices had sent the case back to his court without ruling on the law itself.

But finally, the day came.

In rejecting arguments that the fees payday lenders charge are not interest, here’s what Justice Paul Danielson wrote in the court’s opinion:

“Because the Check Cashers Act clearly authorizes loans charging usurious rates of interest in contravention of the limits set forth in Article 19, Section 13, we hold that the act, in its entirety, clearly and unmistakably conflicts with our constitution and is unconstitutional.”

We also applaud the efforts of the current Attorney General, Dustin McDaniel, who, unlike Mark Pryor, pushed to shut down the payday lenders by issuing cease-and-desist letters.

His actions, bolstered by earlier Supreme Court rulings making it easier for victims to collect from payday lenders’ surety bonds, had already greatly reduced the number of payday lenders in the state.

Obviously, the check cashers and payday lenders found a ready market in Arkansas. They preyed on the poor who could least afford the high-interest charges and the ignorant who didn’t understand that they were getting on a treadmill of debt. And there are plenty of those in Arkansas and every other state. There’s been a nationwide movement at the state and local levels to regulate or do away with storefront loan sharking.

Now that the ruling has been made, it would be desirable for banks and credit unions to reach out to “unbanked” Arkansans with products that, if properly structured and managed, could be profitable without being usurious.