Last in a three-part series

Linda Hilton, an advocate for the poor, abhors "payday loans."

On average, they charge 521 percent annual interest in Utah. Some charge nearly 1,000 percent. And Hilton says she has seen too many people forced into bankruptcy or homelessness by them.

So, she thought lobbying the Legislature, for example, to cap interest at the still-stratospheric rate of 500 percent would be an easy sell. "Boy, was I wrong," she said.

Hilton says she found payday lenders have powerful friends: "mainly, the whole mainstream financial industry," she said. "Bankers up there told me, in so many words, that we would be opening Pandora's box. They said if we capped payday loan interest, then someone might want to cap bank loan interest or mortgage rates, too."

She and her allies also were told that Utah attracts many "industrial banks" (operated by commercial companies such as American Express, General Motors and Merrill Lynch) that bring thousands of jobs to Utah. Lawmakers worry that anything that weakens Utah's wide-open, let-the-market-rule financial laws might scare them and their jobs out of state.

Hilton also says that while advocates for the poor lobby in the Capitol hallways, the financial industry was often invited into the back rooms for far better access. That comes as the financial industry gives more to the Legislature than any other special-interest group. It donated $1 of every $8 that legislators raised in the past election.

While Hilton and her allies have pushed bills for years to try to impose some of the tighter payday loan regulations found in other states, only a few relatively minor provisions have passed here. Most bills do not even come close to passing through committee.

Hilton says she and her allies plan to try yet again at the next Legislature. But both she and her opponents figure she has only a long-shot chance, for a variety of reasons — all of which continue to make Utah a home sweet home for payday lenders.

Friendly Utah

Few states have friendlier laws for the payday loan industry than Utah — which the industry and its allies would like to continue but which critics want to change.

Utah is among 39 states that explicitly allow such loans. It is among only 10 that have no cap on their interest rates or fees. It is among two with no legal maximum for such loans. Utah also allows among the longest periods to "roll over" loans with continuing high interest: up to 12 weeks. Most states ban rollovers.

Among the 39 states that explicitly allow payday loans, 23 cap interest at rates that are lower than the median now charged by lenders in Utah: 521 percent annually. A median means half charge that amount or less, and half charge that amount or more.