GOP legislator’s bill would cap interest rates on securities lending at 36% | Local News
Farnsworth said it was not the first time he had disagreed with his party, at least on this issue.
For example, he cited a proposal several years ago from Senator JD Mesnard, R-Chandler, to allow something called “flexible loans”.
On paper, these would have carried an interest limit of 36%. But the key would be how lenders calculate “usual fees” for everything from managing account information to validating customer information, processing transactions and providing periodic billing statements.
These fees are now capped at $ 150.
However, Mesnard’s legislation would have allowed these fees to amount to half a percentage point of the unpaid balance. On a maximum loan allowed of $ 3,000, that could add up to $ 15 in fees per day – on top of the 36% interest – pushing the effective interest rate down to triple digits.
Farnsworth said him and then-Sen. Kimberly Yee, R-Phoenix, who is now state treasurer, worked with Democrats to reverse the plan.
“I know a lot of Republicans feel like ‘the free market, the free market, it’s fine as long as it’s the free market,'” he said. But Farnsworth said it wasn’t that simple.
“I’m saying we have to be responsible and consider the effects of what we do,” he said.