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After months of delay, aldermen give initial approval to restrictions on payday lenders

A payday loan shop on Natural Bridge Avenue east of Union Boulevard. The high interest rate of payday loans can leave people on the hook for paying more in interest than the original loan.
File photo | Camille Phillips | St. Louis Public Radio
New regulations on payday lenders in the city of St. Louis got first-round approval at the Board of Aldermen on Friday

The St. Louis Board of Aldermen on Friday gave initial approval to legislation that would put new restrictions on payday lenders in the city.

Local officials cannot regulate things like the interest that lenders charge on the short-term loans. Instead, the bills from Alderman Cara Spencer, D-20th Ward, require lenders to get a permit to operate in the city, and set restrictions on where new ones can open. Companies would also have to provide detailed information about the actual cost of a loan and about alternatives offered by non-profits and others. 

"This legislation should be a no-brainer," Spencer said. "We should be doing everything in our power to protect the most vulnerable citizens among us."

A fee to cover the cost of issuing and monitoring the permits will be on the March ballot — which is also the mayoral primary. If voters do not approve the fee, the new regulations will not take effect either.

Mayoral politics echo in debate

Spencer's decision to bring the bills up for a vote after more than four months was a bit of a surprise. Aldermen debated the measures https://youtu.be/OfyG1i9fSJE?t=59m" target="_blank">for more than an hour on June 30 before Spencer put them aside.

"We just brought them out today, and though we'd see what happened," she said. "I'm proud of my colleagues who stood with it."

Discussion on Friday again lasted more than an hour.

"Very often, we have well-intentioned legislation introduced and often passed down here,"  said Alderman Antonio French, D-21st Ward and a candidate for mayor. "Poor people go to payday loan places because they need to make ends meet. If these places are ran out of these communities, those folks still need places to go to borrow money to make ends meet. If we don't replace it with something, I think you're actually making it difficult on folks."

Alderman Jeffrey Boyd of the 22nd Ward, who's also rumored to be interested in a run for mayor, took aim at the portion of the bill requiring payday lenders to provide a pamphlet about alternatives to short-term loans that is "as provided by the Office of Financial Empowerment and approved by the Treasurer of the City of St. Louis." Boyd lost to the current treasurer Tishaura Jones in a four-way primary in 2012, and Jones has indicated she may also be interested in being mayor.

"The Office of Financial Empowerment is a new entity within the treasurer's office," Boyd said. "I'm not convinced it's something that the treasurer's office should be doing because we do have non-for-profits out there that do this work. And if you're looking for funding, the treasurer's office is competing with those entities for funding to provide the same type of information."

Aldermen eventually amended the bill at Boyd's request to make it clear that payday lenders could provide pamphlets from other places as long as they contained similar information.

The Office of Financial Empowerment has come under fire before — in June, aldermen eliminated funding for its budget, a change pushed by French. A spokeswoman for Jones said the office is still awaiting an opinion about the reduction from the city counselor's office.

Alderwoman Cara Spencer, D-20th Ward, thanks her supporters after being sworn into the board of Aldermen.
Credit File photo | Jason Rosenbaum I St. Louis Public Radio
Alderman Cara Spencer, D-20th Ward, at her 2015 swearing-in. Board president Lewis Reed is beside her.

"You can be opposed to the bill if you want to, but I would ask you to be honest with yourself and with the rest of the city as to why you are being opposed to it," Spencer said in her closing remarks. 

In the end, both French and Boyd voted for the bill. Ald. Tom Villa, D-11th Ward, was the only no vote.

In October, the Missouri Ethics Commission dismissed a complaint made against Spencer that she had failed to disclose a personal financial interest. Spencer is the part-time executive director of the Consumers Council of Missouri, which lobbies on issues of personal finance. The complaint was filed by Jane Dueker, who had represented the payday loan industry in a court case in 2012, though she said she filed the complaint on her own.

A spokeswoman said Mayor Francis Slay would sign the new payday loan restrictions if they are passed by the board.

Also on Friday, Alderman Joe Roddy, D-17th Ward, decided not to try again to pass his resolution demanding that St. Louis Metropolitan Police Chief Sam Dotson resign if files to run for mayor.

He said too many of his colleagues were again planning to sit out because they worried how a "yes" vote might affect their relationship with the department.

"And I think that’s the whole point of the resolution is the police chief shouldn’t be running because he’s in too important of a position that in essence can be viewed as being in a position of exercising retribution," Roddy said.

Dotson announced in October he was planning to run for mayor, but has so far resisted calls to resign or take a leave of absence as chief. 

Filing for the March primary opens later this month. 

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