Editorial Backs Payday Loan Reform Proposed by Former Cash Advance Supporter
By J.J. CameronPayday Loan Writer
People can change. Or people can wish to be re-elected as a senator from Alabama. Either way, a recent editorial in The Birmingham News suggests that others should get behind Lowell Barron (pictured).
As we reported on earlier, the senator in question used to own a series of cash loan stores. This year, however, Barron sold his payday lending businesses to a business partner. And now the Fyffe Democrat is proposing legislation to put more restrictions on payday loans.
"I've been in the banking and finance business for 25 years," Barron told The Associated Press, "and I realize there are people with limited credit who have few places to turn, but there is no reason why anyone should exploit people with a short-term cash program."
In the 1990s, online payday advance lending businesses spread like wildfire.
In 2003, the Legislature passed a law that set a maximum fee of 17.5 percent per transaction (still an annual percentage rate of 455 percent) and limited customers to only one rollover. The main thing the law did, however, was to make the practice legal, after state banking officials, attorneys general and courts were poised to outlaw payday loans because they exceeded the 36 percent maximum interest rate allowed under the state's Small Loan Act.
Barron says his new bill would:
- Completely do away with rollovers
- Establish a statewide database to prevent lenders from providing instant cash loans to anyone who has had such a loan in the past 60 days
- Prevent cash advance lenders from taking a person's property
- Ban payday and title loan businesses within five miles of a military base and prevent them from garnisheeing the pay of service members or from collecting from a service member who is deployed overseas for combat
It's all a welcome change from Barron, who as Senate president pro tem presided over the Senate when it passed the bad credit payday loan lender-friendly bill in 2003 over a compromised bill worked out with consumer advocates.
We can't say whether Barron's change of heart is due to a genuine, newfound compassion for struggling families or a political maneuver designed to help him hang on to his Senate seat. But protecting families from predatory lending is commendable.
His colleagues in the Legislature should follow his lead.
