$13 mil later, payday lending still slated to sunset

The payday loan industry suffered a massive defeat Tuesday as voters overwhelmingly opted to let the law that allows payday lending in Arizona expire rather than pass Proposition 200, which would have kept it legal.

The proposition was voted down by a margin of roughly 60 to 40 percent, with 99 percent of votes tallied.  

Other initiatives were defeated by larger margins, particularly Proposition 201, known as the Homeowners' Bill of Rights, which lost on a vote of 78 percent "no" to 22 percent "yes." However, no other group spent as much to convince voters to approve or reject an initiative. None came close.

By the latest available financial report, Yes on 200 spent $12.8 million to secure passage of the initiative.

Those funds came from the payday industry itself, which is fighting for its survival in Arizona. The initiative would have instituted reforms to make the practice more consumer-friendly, but it also would have extended the legality of payday lending indefinitely. The Arizona law that allows payday lenders to operate, passed in 2000, is set to sunset in 2010, which will render the business illegal in the state. Prop. 200 was the industry's best shot at keeping its doors open past the end of 2009.

With the defeat of Prop. 200, though, and absent any subsequent moves to remove the sunset provision, the days of payday lending in Arizona may be numbered.