Montana Loan Interest Rate Limit, I-164 (2010)

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The Montana Loan Interest Rate Limit, also known as I-164, was on the November 2, 2010 ballot in the state of Montana as an initiated state statute. The measure would cap yearly interest rates of payday and title loans at 36 percent. The current interest rate is 400 percent. The initiative effort was spearheaded by the organization, 400 Percent is Too High, and is being backed by Tom Jacobson. Jacobson is the executive director of Rural Dynamics. According to Jacobson, "We see people come in all the time using one payday lender to pay off the other one, to pay off the other one. The fees increase and they have to borrow more, and they can't get out of the circle." The measure was certified for circulation, leaving organizers to gather signatures for the June 18, 2010 petition drive deadline. The measure collected enough signatures to make it to the ballot, according to the Montana Secretary of State.[1][2][3]


Industry officials in the state claimed that the measure's passage will now result in the closure of at least 100 or so Montana businesses, and also even more jobs would be lost. Industry officials also have stated that the passage has left consumers with less options for credit. The measure will go into effect on January 1, 2011, and businesses are already preparing. Under the measure, payday lenders will be able to charge $1.38 for a $100 two-week plan, which according to Martine Ramos-Vargas, an employee at a state Check 'n Go, that is not enough to stay afloat. According to Vargas, "We would not make enough money to pay the rent on the building. Our last day of business is Nov. 19. We were hoping that it (I-164) would not pass so that we could just resume business on the third (of November)."[4]

Election law violations

On Jul 3, 2012, the state political practices commissioner, Jim Murry, determined that eight different groups broke election laws while campaigning in support of the measure. The groups found in violation of the rules were: 400 Percent Interest Is Too High — Cap the Rate, Montana Women Vote, Montana Human Rights Network, AARP Montana, Rural Dynamics Inc., NeighborWorks Montana, and Montana Community Foundation and its endowed fund, the Women’s Foundation of Montana.

The investigation stems from a complaint filed by payday loan business owner, Bernie Harrington, in 2010. Though it is too late to have any impact on the measure itself, the state is exploring legal options which include fining the various groups.[5]

Election results

See also: 2010 ballot measure election results

Official results follow:

I-164 (Loan Interest Rate Limit)
Approveda Yes 253,475 71.76%

Results via Montana Secretary of State.

Text of measure

Ballot title

The ballot title that voters will see on the ballot reads:[6]

Under Montana law, deferred deposit (payday) lenders may charge fees equaling one-fourth of the loan, which is the same as an annual interest rate of 300 percent for a 31-day loan or 650 percent for a 14-day loan. Title lenders may charge interest equaling one-fourth of the loan, which is the same as an annual interest rate of 300 percent for a 30-day loan. I-164 reduces the interest, fees, and charges that payday, title, and retail installment lenders may charge to an annual interest rate of 36 percent. It prohibits businesses from structuring other transactions to avoid the rate limit.

I-164 reduces the license and examination fee revenue paid to the State because certain lenders may not renew their licenses.

[ ] FOR reducing the annual interest, fees, and charges payday, title, and retail installment lenders may charge on loans to 36 percent.

[ ] AGAINST reducing the annual interest, fees, and charges payday, title, and retail installment lenders may charge on loans to 36 percent



  • NeighborWorks Montana, a group based out of Great Falls, stated that the United States Congress protected military families from large interest rates by capping loans at 36 percent. The group said that all families in the state should reap the same benefits. According to Sheila Rice, a member of the organization, "We believe that all Montana families deserve the same protection. I don’t think the legislature understands the impact on families in Montana."[7]
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  • Senators Dave Lewis and Christine Kaufmann were supporters of the measure, with Kaufmann stating, "Senator Lewis and I don’t agree on everything, but we do agree on this. Four-hundred percent (interest) is too high."[8]
  • Senator Lewis stated, "As a Republican, I don’t usually support more regulation, but this is the right thing to do."[8]
  • Claudia Clifford, advocacy director of the AARP, Kim Abbott, Montana Human Rights Network's program director, and Mary Craigle, Montana Community Foundation board member were all for the measure.[8]
  • Tom Jacobson, executive director of Rural Dynamics, was in support the measure, stating, "Four-hundred percent is absolutely too high. It's too high ethically. It's too high financially. Once we can get this capped at 36 percent, we are going to help people become better long-term consumers." Rural Dynamics was a consumer credit counseling service in the state.[9]
  • Two veterans of U.S. wars wrote an opinion piece in the Billings Gazette in support of the measure. John Bullshows, who served in the Vietnam war, and Matt Deutscher, who served in the Iraq war, wrote, "Back in 2006, the U.S. military did the right thing. It took action to protect military families by capping the interest rates on predatory payday and car title loans. Now Montana voters are poised to do the same. By voting for Initiative 164 this year, Montanans will be helping to protect their fellow citizens from abusive loan practices that trap people in debt and hurt our economy. As veterans and Montanans we are glad we have the opportunity to follow the military’s fine example."[10]

Campaigning, events and stories

  • Supporters of the measure held a rally in Great Falls on September 1, 2010 in favor of the measure. According to Liz Stoeckel, the Fund Development Coordinator at HomeWORD, "Passing this ballot initiative to cap the interest rate, on payday and car title loans, will strengthen the economy. The majority of these businesses are owned by out of state companies. They collect millions of dollars in fees from Montana working families every year.."[11]
  • A debate was held about the measure on September 28, 2010 at the Missoula Public Library. The debate was held by the League of Women voters, where both sides of the issue were debated by supporters and opponents. Greg Harper of the Consumer Credit Council, and who was a supporter of the initiative stated, "I'm grateful for the opportunity to give a voice to my clients that suffer at the hands of these high-interest rate loans. These types of loans really trap consumers into a cycle of debt that is very difficult for them to overcome." Supporters called the interest rate on a payday loan as "predatory" and that the measure would protect the state's low-income residents.[12]
  • Supporters of the measure planned to hold a telephone town hall meeting to discuss the proposal on October 7, 2010. According to the organizers of the event, between 3,000 and 6,000 people took part in the meeting, which included national experts. According to AARP Montana Advocacy Director Claudia Clifford, who moderated the call, "This call gives thousands of voters the opportunity to ask questions and hear how I-164 will protect state consumers from the triple-digit interest rates on these loans."[13]



  • Jullie Howen of Title Cash Stores states that lenders may struggle if the measure is passed by voters in Noveber. Howen stated, "There’s no way, if this passes, the services we offer will no longer be available in Montana." Howen later added that the service that she provides is necessary, stating, "Banks don't want to deal with small amounts or short term loans, that’s one of the biggest issues where we really feel there is a market need."[14]
  • Ed Kemmick of the Billings Gazette stated that the measure is 'misguided', arguing the following point as to why interest rates shouldn't be capped, "Borrowers can take out loans from multiple vendors, even though they are required to fill out a form saying they have no outstanding loans with other lenders. That’s open to abuse, obviously, but if it’s really a problem the solution is creating an electronic statewide database, not capping the interest rate."[15]

Campaigns, rallies and events

  • A debate was held about the measure on September 28, 2010 at the Missoula Public Library. The debate was held by the League of Women voters, where both sides of the issue were debated by supporters and opponents. According to Bernard Harrington, who is an industry spokesperson who owns payday loan stores, stated that the measure is a prohibition on short term loan industry. Harrington argued at the debate, "In today's economy, when banks and other financial institutions are charging up to $35 to bounce a $5 check, it makes the $15 we charge on a $100 loan look pretty small."[12]

Campaign finance


As of September 5, 2010, supporters of I-164 had raised $222,000 plus $87,000 in in-kind donations.[16]


As of September 5, 2010, opponents of I-164 had raised about $209,000 in cash supplemented by $96,000 in in-kind donations.[16]

Media endorsements

See also: Endorsements of Montana ballot measures, 2010


  • The Bozeman Daily Chronicle stated its opposition to the measure, arguing, "It's unfortunate that many Montanans find themselves so cash-strapped that they have to turn to these loans. But the fact of the matter is they do. And without payday loans, they could be in desperate straits. Voters should reject I-164."[17]
  • The Great Falls Tribune is against the measure, urging a 'no' vote by writing, "We regret that many people do feel the need for these loans, and we agree with initiative backers that consumer education would go a long way toward obviating the need for them. But as long as there are people who have funding crises, there will be a market for this type of business. Passing I-164 will just drive it underground or onto the Internet, where no one's watching. Vote against I-164."[18]

Legal action

First attempt

On August 17, 2010, the Montana Supreme Court ruled that the measure could stay on the November ballot, after The Montana Consumer Finance Association requested that the court remove it from the ballot. The measure was allowed to stay on the ballot after a 4-2 vote to allow the measure to be decided by voters, but to alter the for and against statements and the statement of purpose on the ballot. That ruling can be found here.

The group requesting that the measure be taken off the ballot did so due to their concerns that the Montana Attorney General, Steve Bullock, did not comply with state law, because ballot statements prepared by the AG's office were not impartial. According to Justice Brian Morris, "We decline petitioners' request to overrule the attorney general's legal sufficiency for I-164, or to tamper with the text of the initiative itself. The attorney general acted within his considerable discretion in drafting the ballot statements and fiscal statements for I-164."[19][20]

Second attempt

Despite the Montana Supreme Court's ruling, opponents asked a district judge to block the Montana Secretary of State from sending the measure to the ballot, due to the ballot language change that the Supreme Court requested. Opponents argued that the change in the language should void petitions signed by state voters because they saw different versions of the initiative.[21]

Two day trial

A two day trial began on September 30, 2010 regarding the second attempt of opponents to try to take the measure off of the ballot. Supporters of the measure began their arguments on the second day of the trial. According to supporters' attorney Jimm Reynolds, "We're hopeful we're successful on behalf of the 27,000 people who signed petitions and want it on the ballot. If we're denied, the initiative process may be dead in Montana."[22]

C.B. Pearson, the senior vice president of the firm hired to collect the signatures on the initiative's petition, M+R Strategic Services, stated, "This is a classic example. A coalition of citizen organizations have been fighting (to cap the interest rates) at the last three legislative sessions...They've had no choice but to go to the people because they couldn't overcome the power of the payday lender lobbyists."

Opponents, in the first day of the trial, accused the petition drive of lying about the payday and title-loan industry and having illegal contests among signature collectors, among other accusations.

District Judge C.B. McNeil of Polson ruled Oct. 7 that there was no evidence that the law had been broken in collecting signatures, and that the measure would remain on the ballot. There was no immediate word about an appeal. [23]

View text of I-164 ruling

Path to the ballot

See also Montana signature requirements and 2010 ballot measure petition signature costs

Petition circulators had until the June 18, 2010 petition drive deadline to turn in the required 24,337 signatures, since the proposed measure is a citizen-initiated state statute. Counties had until July 16, 2010 to send verified signatures to the Montana Secretary of State's office, where the Secretary of State may or may not qualify it for the ballot, pending another review of signatures.

On July 19, 2010, the measure was certified for the ballot by the Montana Secretary of State, who stated that sponsors submitted enough signatures for ballot access.[24] [1][3]

See also

Suggest a link

Additional reading


  1. 1.0 1.1 Montana Secretary of State, "2010 Ballot Issues"
  2. Public News Service, "Montana Initiative Takes on the Payday Loan Industry", February 24, 2010
  3. 3.0 3.1 The Missoulian, "3 ballot measures qualify for November", July 20, 2010
  4. Great Falls Tribune, "Debate over I-164 rages as high-rate lenders prepare to close", November 7, 2010
  5. Independent Record "Initiative backers tagged with violations," July 4, 2012
  6. Montana Secretary of State, "Initiative No. 164 (I-164)"
  7. Queen City News, "Initiative proposed to cap interest rates", February 24, 2010.
  8. 8.0 8.1 8.2 8.3 Queen City News, "Initiative 164 supporters launch campaign", September 8, 2010
  9. Bozeman Daily Chronicle, "Initiative to cap interest rates on November ballot", September 27, 2010
  10. Billings Gazette, "Guest opinion: I-164 would protect families from usurious rates", October 18, 2010
  11., "I-164 amis to cap payday loan rates", September 1, 2010
  12. 12.0 12.1, "Initiative to cap "payday" loans debated in Missoula", September 29, 2010
  13., "I-164 supporters holding statewide event", October 6, 2010
  14., "Ballot Initiative Could Put Short Term Lenders out of Business", July 27, 2010
  15. Billings Gazette, "City Lights: Payday loan initiative is ‘misguided’", October 9, 2010
  16. 16.0 16.1 The Billings Gazette, "I-164 foes have equal bankrolls", October 2, 2010
  17. The Bozeman Daily Chronicle, "Chronicle editorial: Editorial board offers endorsements on key initiatives", October 20, 2010
  18. Great Falls Tribune, "'Cap the rate' initiative has appeal but should be rejected", October 27, 2010
  19. Missoulian, "Montana Supreme Court OKs payday loan initiative", August 18, 2010
  20. Billings Gazette, "Opponents of interest rate cap seeks to prevent I-164 certification", August 19, 2010
  21. Canadian Business, "Payday loan initiative foes make another attempt to block proposal from reaching Mont. ballot", August 20, 2010
  22. Missoulian, "'Payday loan' initiative backers state case in Polson trial", October 1, 2010
  23. Independent Record, "Judge rules that payday lender initiative will remain on ballot", October 7, 2010
  24. Billings Gazette, "2 initiatives likely qualified for fall ballot; 4 are question marks", June 18, 2010