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S.D. Caps Payday Loan Interest Rates at 36%

PIERRE, S.D. (CN) — South Dakota became the most recent state to crack down on the short-term loan industry by capping interest rates for the lenders at 36 percent.

Initiated Measure 21 won the support of 72 percent of voters despite outcry from short-term lenders in the state, who claimed the true purpose of the initiative was to drive them out of business.

Payday lenders sued the state's attorney general, Marty Jackley, for not including the possibility of the lenders going belly up in his description of the measure for voters.

The state's Supreme Court upheld Jackley's ballot explanation.

In the days leading up to the election, a scare tactic campaign insinuating that the measure was part of President Barack Obama's personal "agenda" fell flat in the consistently red state.

The initiative's sponsor, Democrat Steve Hildebrand, was deputy national campaign director for the president in 2008.

The state's Republican governor, Dennis Daugaard, was among those who voted in favor of the measure.

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