In a surprising turn of events, a bill that would have imposed stronger regulations on payday lenders in Virginia was killed Monday night by its own creator, according to the Hampton Roads (Va.) Daily Press.

Glenn Oder, a Republican from Newport News, struck down his own bill rather than risk it being toughened by a proposed amendment on the Virginia House of Delegates floor. He had promised to do just that if he felt his effort to curb payday loans end up going too far. Bills die often in the General Assembly, but this kind of self-inflicted death is noteworthy.

"It's rare," said Democratic leader Brian Moran, of Fairfax. "It's happened before, but it's rare."

Oder had been working for weeks on what he thought of as a compromise on payday loan industry legislation. Payday cash advances have more than doubled in just the past two years in Virginia. With high interest rates on short-term loans of up to $500, these resources often lead to financial trouble, not relief, among borrowers. Oder was hoping to pass into law:

• Limits on the number of outstanding loans a borrower could have
• A ban on borrowing to pay off payday loans
• The creation of a database to include all payday advances, with frequent inspections from state regulators to identify violations and a fine of $1,000 for each violation.

With the prospects of passage grim, Oder worked out a compromise by dropping the database and inspection provisions in order to get his legislation to the floor. He promised payday industry lobbyists that he would kill his own bill if those stipulations were added on the floor, and that's exactly what happened.

"I feel like I gave my honor," he explained to fellow legislators.

It turns out that the database and inspection policies were precisely what delegates such as Kenneth Alexander, of Norfolk, wanted to add to the bill. So Oder acted as promised and negated his own bill without a single vote being tallied.

"He realized what was going to happen. I was going to win. We have to protect families of low and moderate income, and military families, who are being hit by these predatory lenders. This bill didn't go far enough," Alexander said.

The bill would have discouraged borrowers from taking out payday loans to pay off another, banned lenders from assessing fees for bounced checks, and instituted a no-interest two-month repayment plan for people with several outstanding loans. But delegates say the bill contained no measures to ensure lenders' compliance.

"The bill didn't do enough," complained Kenneth Melvin, of Portsmouth. "I didn't want people to think we cured the evils of payday lending with this bill. We would not have. We'll come back next year to do this right."

Somewhat surprisingly, a payday advance industry lobbyist said he was disappointed the bill was dead.

"These were consumer protections we thought were appropriate, while preserving the industry," said attorney Reginald N. Jones of Williams Mullen, a Richmond law firm.

What happens next year when legislators attempt to bring this issue back to the floor is uncertain, but it will surely be contentious. How far are both sides willing to bend without breaking? As we are seeing with a proposed Illinois payday loan law, it is often hard for legislation, however well-intentioned, to survive the political process.

Isabell Trujillo told New Mexico lawmakers that she took out a payday loan when she needed additional money to pay medical bills, then requested another when she couldn't pay off the sum. And so on. Twelve payday loans later, she owes $1,200 every two weeks in interest alone.

The Alamogordo News reports that the New Mexico Senate Corporations and Transportation Committee heard testimony on four bills last week, each designed to regulate payday loan businesses. The Committee Chairperson, Democrat Shannon Robinson of Albuquerque, said they would work to combine them into a single bill.

Advocates of the payday cash loan legislation say Trujillo's experiences are all too familiar, and that a 14-day loan term sets people up to fail. But Margaret Coyazo-Hernandez, owners of Fast Bucks in Alamogordo, calls the criticism unfair. She counsels borrowers on the dangers of short-term loans, and often advises them to seek other options.

Coyazo-Hernandez said many of her customers have already gone to more traditional lenders — and been denied.

"A lot of these people have already burned their bridges, and they come to me. We tell them, these loans are for short-term needs," she said.

According to Steve Solomon, V.P. of Fast Bucks, people use the cash advance loans for emergencies such as paying their utilities, avoiding late fees or bounced checks, etc.

"Tens of thousands of New Mexicans are asking the Legislature to keep these businesses going," Solomon said. "They vote with their feet every day."

State payday loan operators say they don't oppose regulation, but insist they would be put out of business if the legislation sponsored by Sen. Bernadette Sanchez, an Albuquerque Democrat, is passed. Three other state senators have also sponsored bills, but Sanchez's is the most drastic.

It would extend the length of the loan to 120 days, while others would lengthen it 90 days. Another idea is to limit borrowers to two rollovers and provide options for those unable to pay. The legislation also puts limits on interest rates and restricts the number of loans per person.

Joel Cruz Esparza, head of the Consumer Protection Division of the Attorney General's office, said that payday loan companies are exaggerating when they say the legislation will put them out of business.

"The intent of the legislation proposed by the attorney general is not to eliminate the industry. The intent is to change the product," he said.

Esparza said agencies could continue to offer online payday loans and keep their stores open, but with more consumer-friendly installment loans. This battle between New Mexico legislators and loan providers is similar to many throughout the country, notably a Central Illinois payday loan clash. Will the products offered by cash advance companies be dramatically altered? Only time will tell.

A Sangamon County (Ill.) judge blocked a state agency from enforcing parts of the new Payday Loan Reform Act — a law designed to protect consumers, but one that some businesses say would cause them irreparable harm.

Consumers typically take out payday loans as advances as their next paycheck, with the expectation of repaying the loans back as soon as they are paid by their employer. But some people have ended up in debt because of their inability to repay the money quickly, according to the Central Illinois Register-Mail.

But Circuit Court Judge Patrick Kelley issued a temporary restraining order against the Illinois Department of Financial and Professional Regulation after a lawsuit was filed earlier this month by seven payday lenders. The businesses argue that portions of the payday loan law, which took effect in December, should not apply to oans with terms exceeding 120 days.

The businesses also contend that the state agency has overreached its regulatory authority by establishing rules stating that certain provisions of the payday loan law also should apply to the longer-term loans. One rule would require reporting the longer-term loans to a new state database designed to track payday loans. A March 14 hearing is scheduled.

"The illegal rules will unfairly impair the ability of (the lenders) to conduct their lawful business in Illinois, as well as deprive consumers of financial products to which the General Assembly intended they have access," the lawsuit states.

But acting secretary Dean Martinez of the Department of Financial and Professional Regulation disagrees, calling the new laws essential for the protection of Illinois citizens.

"Our posture is that we actually followed exactly the intent of the law," Martinez said.

The new law hopes to curb payday loan debt with provisions that will prevent borrowers from having more than two outstanding payday cash advances. The amount of interest charged for each loan will also be limited to $15.50 for every $100 lent. Supporters of the reforms are disappointed with the decision by the judge to issue a restraining order.

"Since the new law applies to loans of 120 days or less, the longer-term products are blatantly undermining the law's intent to end abusive payday loan practices," said Lynda DeLaforgue, co-director of Citizen Action Illinois.

Martinez said his agency filed proposed rules to "better protect borrowers against predatory lending practices" by anyone licensed under Consumer Installment Loan Act. The rules mirror protections already in the Payday Loan Reform Act, but with additional safeguards, like prohibiting businesses from accepting a customer's postdated check for loans with finance charges exceeding an APR of 36 percent.

This is similar to the legislation proposed by other states to better control the payday loan industry. But how far can government go before it intereferes with businesses' rights? It will be interesting to monitor how this Illinois no faxing payday loan fight plays out at the hearing next month.

In response to a scathing San Francisco Bay Guardian editorial regarding payday loan firms, a reader — who happens to be a Senior V.P. of the Community Financial Services Association of America — takes the publication to task over a couple of missed facts.

First of all, contrary to popular belief, she asserts that payday advance customers are not poor. Research shows they are often middle-income, educated, working people — more than half of whom make between $25,000 and $50,000 annually. About 58 percent of applicants have attended some college, and nearly 100 percent have a bank relationship, as a personal checking or savings account, along with a steady income, is required to get a payday advance.

The Guardian references the millions in revenues being "pocketed" by payday lenders, which shows a disregard for the facts. Short-term loans are actually expensive to originate, and the revenue of payday companies is simply the total amount of fees collected. All operating expenses — employee payroll and benefits, rent, utilities, loan losses, et cetera — must be subtracted from that sum.

Because banks and payday advance lenders offer different services, it is inaccurate to assume the physical presence or absence of one affects the other, as the Guardian asserts. A payday loan is a small cash advance for people needing help between paychecks. The demand for this product was created because banks stopped making short-term loans, not because they moved out of low-income neighborhoods.

Millions of consumers choose payday loans as convenient alternatives to bounced checks and overdraft fees, or late penalties on credit cards. They find payday loans easier than asking family or hocking their possessions at pawn shops. Customer satisfaction figures exceed 80 percent.

The Community Financial Services Association of America has worked in 38 states, including California, with lawmakers who wish to support consumer protection. The association believes Californians are best served when given a variety of options — as well as the full disclosure of facts — and then trusted to make financial decisions based on what's best for themselves.

EZCORP may not be a household name, but its business reaches more and more people every day. Its 281 pawn shops and 242 payday loan locations, charging cash-strapped consumers high interest rates for a quick loan, have boomed lately, with sales and earnings growing at a double-digit clip.

But management and legislative concerns are giving investors pause.

At the company's EZPAWN shops, consumers hand over their possessions as collateral for a loan. The loan is generally due in 30 days, although the payback period can be extended for an additional fee. Consumers who don't want to involve their prized possessions for cash can apply for a payday loan at one of the company's 242 EZMONEY stores.

With little more than proof of a job and bank account, a customer can receive up to $1,000 to meet short-term cash needs.

The fees? EZCORP charges $15-20 per $100 borrowed. The company would like customers to think the fees are modest in comparison to credit card late payments, but that may not be the case. If a person borrowed $100 for 30 days at a fee of $15, that's an annual percentage rate (APR) of 180 percent. The company will allow the consumer to extend the payday cash advance for a couple of periods — plus additional fees, which make the APR even higher.

Given the high level of consumer debt, the demand for payday loans has risen dramatically. More than $40 billion in such loans were granted last year alone, a fact reflected in EZCORP's most recent financial quarter. The company's net income jumped 37 percent above the prior-year period, with a 23 percent rise in revenue.

With economic conditions expected to remain bullish, EZCORP upped its projections for the fiscal year 2006. It expects earnings between $1.50 and $1.55 per share (compared to $1.09 in 2005), with a potential jump to $1.86 per share in 2007. It shouldn't surprise investors that a company in this business may engage in several business practices that might raise concerns, however:

1. Madison Park LLC, a firm whose sole owner also controls 1.2 million class B voting shares, also earns a six-figure consulting fee.
2. The company will not say how much of this quarter's net income resulted from the sale of old or bad debt.
3. Finally, there are the ongoing regulatory concerns of the payday loan business in general. The industry has won some recent court battles, but the growing consumer outcry against high loan fees could result in a legislative backlash at any time.

Trading near its all-time high, and at less than 50 percent of its projected growth rate, EZCORP might seem like a good deal for investors. But when you factor in its questionable management structure and the questions concerning the long-term earning potential of payday advance loans, the legislative future of which is very much up in the air, the stock looks like much less of a deal.

Bills regulating the roughly 300 payday loan stores in South Dakota were introduced in the South Dakota State Legislature as its 2006 session convened.

The state's lack of an interest rate limit, which was aimed at luring banking companies, has fueled the rise of these quick loan companies, according to the Aberdeen News. Loans from the various cash advance establishments in the state typically last up to 30 days and carry annual interest rates of 400 percent or more.

One proposed bill would amend the current South Dakota short-term lending law to add the definition of a consumer small loan — a short-term, non-revolving loan of less than $500 that is to be paid in a single installment.

Mary Glenski, a Sioux Falls Democrat who sponsors the bill, said it would regulate the increasingly popular short-term loans without alienating the credit card industry. The bill would eliminate a section that allows borrowers to roll over — or extend – a faxless payday loan up to four times.

While the lawmakers' approaches differ, anti-payday legislation is drawing bipartisan support. Joni Cutler, a Republican from Sioux Falls, is proposing her own bill that defines short-term consumer loans as anything that applies to an individual and lasts six months or less. Cutler's bill would require lenders to disclose any fees or charges, including the cost of a loan as an annual percentage rate (APR).

"I'm sure whatever does happen or gets passed will be reasonable. I can't comment on any of the specifics because I haven't had a chance to go through them," said Bruce Cooey, who manages Dollar Loan Center stores in South Dakota, Utah and Nevada.

South Dakota payday advance companies say that the loans are meant to be repaid quickly, almost like an overdraft account. But lawmakers said they fear the ability to extend the loan four times is what leads to an endless downward spiral of debt — a weekly $10 fee on a $100 loan, by the end of one year, adds up to more than $520 in late surcharges alone.

"It's not a partisan issue," said Bill Napoli, a Republican from Rapid City that is co-sponsoring both bills. "It's a people issue."

The California Department of Corporations announced it has settled administrative actions against Los Angeles resident Saverio Lanni for making more than 3,000 payday loans without a state license.

Operating under a fictitious business name, Check Exchange, Lanni violated the California Deferred Deposit Transaction Law by making payday loans during the period of January-August 2005. The bogus business operated through four stores, two of which were located in Hemet, and one each in Fontana and Lomita.

"Our department will vigorously pursue repeat violators who flagrantly refuse to abide by laws designed to protect consumers. There are dire consequences to their unlicensed activity," acting Corporations Commissioner Wayne Strumpfer said.

It gets worse for Lanni. In Check Exchange's license application to operate as a payday loan agency, he falsely claimed that he had never been subject to an enforcement action in California and had never had a business license revoked — both of which are blatantly untrue. In January 1980, the California Department of Real Estate revoked Lanni's license as a salesman.

As a result of the settlement, Lanni's pending applications for a license as a payday lender were denied. He agreed not to challenge the desist-and-refrain order previously imposed by the state agency, which also orders Lanni not to engage in any unlicensed payday loan activity.

Furthermore, the Department of Corporations has obtained a preliminary injunction against both Check Exchange and Lanni, an action that is still pending in Los Angeles Superior Court. That action seeks a permanent injunction against Check Exchange from operating a payday loan store without a license and also seeks to impose civil penalties.

It's good news for consumers in Southern California that the state has halted the activities of this unlicensed and facetious agency. When and if a consumer decides to obtain a payday loan, it should always be from a licensed provider.