General Assembly's payday-lending reform is far from perfect, but at least it's progress
Date published: 3/14/2008
IT TOOK two tries, but Virginia legislators have finally struck a deal on payday lending. If Gov. Tim Kaine signs off on their bargain, Virginians will get a small bit of relief from the worst practices of payday lenders.
Lawmakers opened this can of worms in 2002 when they let payday lenders into the commonwealth. Their outlets now outnumber McDonald's eateries or Starbucks shops and they hold Virginians in hock to the tune of almost $1.5 billion, a figure which prompted lawmakers to begin looking into reining in some of the loan shops' excesses.
In the final hours of the 2007 assembly, talks between the payday-lending industry and its legislative critics fell through as each side dug in its heels. That nearly happened again this year, but after some stern warnings from Gov. Kaine and Sen. Richard Saslaw, D-Fairfax, the lenders' ally, legislators kept negotiating until the two sides reached an understanding.
The House and Senate bills would cap the interest rate at 36 percent, lengthen the time that borrowers have to repay a payday loan, limit how many loans borrowers can get each year, and bar lenders from making loans to service members. They would also establish a state database to track the industry. Sadly, however, the complicated compromise allows some "loan fees" that effectively keep consumers in hock up to their ears.
So the final mix is one that neither party really likes--which is the classic fruit of politics. Payday lenders, who've spent millions of dollars to advertise and lobby against reform over the past year--giving more than $310,000 to legislators' campaigns--say the changes will hurt people who use the cash advances responsibly. Industry foes said the restrictions won't do enough to protect borrowers.
We're inclined to agree with that. While any check on the crushing cycle of debt is better than none, the General Assembly should have done more to protect the state's most vulnerable consumers.
Don't deny it(posted by
hellboyo
, Mar. 20, 2008 1:02 am)
Everyone has a right to their opinion and SHOULD have the right to choose what works best for them. You don’t like payday loans? Don’t take one. Stop meddling in other peoples lives and personal financial decisions!
Hypocrisy(posted by
present
, Mar. 20, 2008 12:36 am)
It's a funny analogy, comparing payday lenders to Starbucks and McD's. Should we be imposing a 2-burger limit on McDonald’s customers? Should we be limiting coffee intake on Starbucks customers because they can get wired? Starbucks customers pay 4x more for their drinks than Dunkin Donuts! That's unfair and predatory!
Leave it alone!(posted by
grant1
, Mar. 18, 2008 1:43 pm)
According to Mr. McGovern, "[t]he nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else."
Why are we blaming payday lenders for the mistakes of the consumers? We need to be held accountable for our own actions. If we keep bailing these people out, they are never going to learn to take care of themselves. Leave the payday lenders alone!
Star Directory
