A bipartisan coalition’s victory on predatory lending in South Dakota offers inspiring lessons in a bleak time.
On election day, 76 percent of South Dakota voters supported a ballot measure to crack down on payday loan sharks. In a deeply polarized nation, the lessons of this bipartisan victory could hardly be more important for activists working to build alliances across the political divide. A key organizer of South Dakota’s success has the story.
By Reynold Nesiba
To give you a sense of what we were up against: The payday lending industry outspent our coalition by a ratio of about 16-to-1. Our industry opponents also put up a competing measure — a “beast of evil genius,” I called it during the campaign.
Our measure proposed a hard interest rate ceiling of 36 percent on payday loans. Theirs masqueraded as an 18 percent cap, but a huge loophole left it almost totally meaningless.
How did we fight back? Our strength came from our diversity. Our two co-chairs, conservative pastor and Republican state legislator Steve Hickey and long-time Democratic activist Steve Hildebrand, disagree on issues ranging from abortion rights to marriage equality. But in 2014, after a huge fight over gay marriage, Hickey invited Hildebrand to meet and talk.
Eventually, these two men realized that they shared a mutual concern for the poor and a deep opposition to how payday lenders were creating and perpetuating hunger and homelessness in South Dakota. The average annual interest rate on payday loans in our state has been 574 percent.
Hickey and Hildebrand resolved to work together to regulate predatory loans. They brought together supporters from across the political and religious spectrum, people of all ages and income groups.
I had received a similar invitation from Pastor Hickey to have a cup of coffee and talk in 2013. He was already trying to build a bipartisan coalition on predatory lending. He knew I was a Democrat and had experience working on ballot measures, an important tool for social change in South Dakota.
In 2004, I’d worked on one initiative to repeal our highly regressive sales tax on food. Mike Rounds, South Dakota’s governor at the time and now a U.S. Senator, led the charge to defeat that measure.
Two years later, we found ourselves again at odds with Rounds when we created and won a measure to restrict use of our state’s airplane fleet to state business after news reports revealed that the governor had been using these planes for personal and political purposes. More recently, I’ve been involved in successful ballot fights over increasing the minimum wage.
When Hickey called me, I knew that he had used ballot measures in two unsuccessful attempts to ban abortion in South Dakota. And so, as a progressive, I was somewhat reluctant and guarded about even bothering to meet with him. Today I’m glad I did.
On September 24, 2014, “The Steves” and I formed South Dakotans for Responsible Lending as a ballot question committee to restrain irresponsible lending and its exploitation of the poor. They serve as co-chairs, and I serve as treasurer.
We spent the summer of 2015 with three or four paid petition circulators and an army of volunteers who gathered almost 20,000 signatures by the November 2015 deadline.
Meanwhile, Rod Aycox, owner of North American Title Loans, pursued several tactics to block us. He sued the state attorney general over the ballot language and lost in the South Dakota Supreme Court. He also sued the secretary of state’s office over the way it had approved our petitions, and that move was also defeated in court. And then Aycox’s group sponsored and gathered sufficient signatures to put the misleading Constitutional Amendment U on the ballot.
With the media fixation on the presidential race, getting the press and the public to understand and describe this competing ballot measure appropriately would prove a huge challenge. We met it. Our supporters gave informational talks about both measures at Rotary and Lions clubs and church forums, wrote letters to the editors of newspapers across the state, and used social media to get out our message.
Ballot measures are assigned letters and numbers based on when signatures are turned in. Just by luck, the other side drew the letter “U.” Telling people “U is for Usury!” and “Shame on U,” as we did, may have helped some voters remember that this was the deceitful measure backed by the industry.
[pullquote]We need to see those working against us not as enemies, not as villains, but as potential allies.[/pullquote]
Despite the defeat of the industry measure and the overwhelming support for our Measure 21, our fight here in South Dakota has not ended. We fear that Rod Aycox and friends will attempt to get the state legislature to create a new lending product or pursue legal challenges that would allow the payday lending predators to stay in business.
As a coalition, we will continue to pursue ways to make affordable credit available to working people in our state. One possibility would be to encourage employers to make a no-cost payday advance available to their employees — say three or four times per year— to help working families and individuals meet their financial obligations. This could become an important benefit used to recruit and retain employees in South Dakota’s low-unemployment environment.
The basic lesson from our experience? To build coalitions that can create positive social change, we need to unite people of diverse political, income, race, and religious backgrounds. In our case, that meant working together with those we have vigorously and publicly opposed on other issues.
We need to see those working against us not as enemies, not as villains, but as potential allies.
In fact, at this point in American history, this lesson applies to our political rhetoric and practice more generally. To create progressive change requires honest and effective partnership with those many wrongly see as the opposition.
Reynold Nesiba, an economics professor at Augustana University in Sioux Falls, South Dakota, has just been elected to the South Dakota state senate.