Rep. Marian McClure's initiative to place an interest-rate cap on payday lenders is a hopeful sign that Arizona yet may find a way to regulate these financial predators. But her initiative, announced Wednesday, won't be on the ballot before the end of next year, assuming she gathers sufficient signatures.

In the meantime, the Arizona Legislature — no friend of meaningful regulation of high-cost loans — is on the verge of guaranteeing a lifetime of profits for payday lenders and continuing debt and financial hard times for their customer-victims.

Ironically, the harmful bill working its way through the Legislature was crafted by none other than McClure. Though claiming to restrict the predatory practices of the payday lending industry, this bill offers only minimal improvement at a huge cost: It would eliminate the sunset provision in state law that would truly protect the poor and the desperate by closing down the industry in 2010.

Payday lenders operate by exploiting people who out of desperation or lack of sophistication enter into an agreement they have little hope of being able to keep. In a typical transaction, the payday company lends the borrower about $300, taking as collateral the borrower's check. The borrower agrees to come back in two weeks to redeem the check. For this, the firm charges a fee equal to 17.6 percent of the loan.

But most borrowers cannot keep their agreement. Typically, they have borrowed the money for necessities — their rent, mortgage, car insurance, groceries or an unanticipated car repair. People who need to borrow such relatively small amounts for necessities are unlikely to be able to pay back the loan in just 14 days.

The lenders not only know this, they count on it. Every two weeks, the loan is renewed — with the 17.6 percent fee compounding every time. The lenders claim to be seeing people through a moment of financial distress. But in actuality the industry profits by trapping borrowers in a cycle of debt. Nationally, payday lenders make 90 percent of their revenue from borrowers who cannot pay off their loans when due, according to the Center for Responsible Lending.

McClure's legislative bill would prohibit renewals of loans. But it fails to create an effective way to police that prohibition.

Moreover, a feature allowing borrowers who cannot repay the loan the opportunity to choose a repayment plan is less of a reform than it may seem. Similar laws in other states have had little effect, at least partly because the borrower must ask for the repayment plan within 14 days. McClure's bill would be more realistic if it prohibited ultra-short loans and required all payday loans to be of at least 90 or 120 days duration.

The human damage caused by the payday loan industry's sky-high consumer charges already has been recognized by the U.S. Congress and President Bush. Effective Oct. 1, loans that cost more than 36 percent per year will be prohibited for members of the military and their families. Unfortunately, that leaves military veterans and the rest of the population still vulnerable to the industry.

Legislators have powerful leverage over the industry because the law exempting payday lenders from Arizona's 36 percent usury limit expires in 2010. But McClure's bill squanders this leverage. It would be far better if the Legislature killed this pretend reform and allowed the sunset provision to take effect.

In the meantime, McClure's just-announced initiative offers the hope that voters can do what the Legislature so far has been unwilling to do: Protect Arizona's poor and desperate from financial predators.