In all the fervor about getting military payday loan legislation passed, those that support the initiative may have overlooked one tiny detail:

• What happens if the law actually is passed?

The Army Times quoted Sen. Tim Johnson, whose son is an Army enlisted man, as raising that issue during a Sept. 14 Senate hearing on the Pentagon’s calls for new federal laws to protect service members.

“If we are to eliminate payday lending altogether or make it unusable, the question is, who fills the void?” Johnson said. “We need to make sure we don’t have unintended consequences that are worse than what we have now … What do you say to that young soldier who wants to go to his mother’s funeral?”

However, David S.C. Chu, undersecretary of defense for personnel and readiness, said this isn't about airline tickets. He said the Pentagon’s main goal is to educate service members so they live within their means, and that if they do borrow money, they do so at reasonable rates from reputable sources; this may or may not include no faxing payday loan providers.

For those reasons, the Defense Department supports a 36 percent cap on interest and loan fees to service members that would apply to all types of loans, including those over the Internet, Chu said.

“The issue is predatory lending, about people getting in over their heads,” he elaborated. “Nobody is saying they shouldn’t borrow.”

Military payday advance alternatives: Someone needing a short-term loan can go to a military aid society for help, or may get a small loan from a credit union, he added. The 36 percent interest and fee cap recommended by the Defense Department was included by the Senate in the 2007 defense authorization bill, and is now being negotiated with the House.

Sen. Elizabeth Dole, R-N.C., who pressed the Pentagon to investigate regular and faxless payday advance lenders, said that if the authorization bill doesn’t include the interest cap, she will introduce separate legislation so the Pentagon’s recommendations don’t die.

Dole said the military has a responsibility not only to educate but also to protect service members.

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Despite a meeting held last week on payday loan awareness in the area, it doesn't appear as though much will change on that front on South Carolina.

Governor Mark Sanford said he won't push for changes in the industry.

In a Sun News article, it was reported that Sanford see doesn't see the state following North Carolina and Georgia in outlawing super-high interest lending. Sanford's remarks came as the AARP decided payday advance and car title lending was their number-two priority for the 2007 legislative session.

At a meeting at the Grand Strand Senior Cente, Althea Truitt of Camden, said she recently found out her friend, who is mentally ill, has 10 payday loans.

"She is retired on disability. She no longer has fluid money. I had no idea that it could get that bad," Truitt said.

She thinks the industry should be banned or regulated because "they prey on poor people." If Sanford wins a second term in November, the Republican governor said he won't push for changes in the cash loan industry, though. He emphasized that he doesn't like payday lending, but said "those vendors are there because there's a demand for that product. Some of these folks can't get a loan at that lower rate."

Problem with payday loan enforcement: No fax payday loan lenders can be outlawed, but it would be difficult to enforce, Sanford said. The lenders charged $150 million in fees on more than 4.3 million loans in 2004 - closing more loans than the total population of South Carolina.

In Horry County, 52 new payday lending locations opened up between July 2005 and June 2006 - equal to one a week. Georgetown County has 20 licensed businesses. The industry is BIG business in South Carolina, which is home to Spartanburg-based Advance America Inc. The company operates in 36 states and is one of the nation's largest providers of fast payday loans.

Advance America wants to "work with local and state governments that help develop responsible use rules for the use of our services," spokesman Jamie Fulmer said.

Tougher laws that force the company to curtail or stop operations don't help consumers, Fulmer said.

Theresa Ross with Consumer Credit Counseling in Horry County counsels clients to go to a bank that will do small $200 to $300 loans, like Conway National Bank, instead of going to a payday cash loan lender. As long as individuals are aware of alternatives, it seems like it ought to be their decision to make.

In the battle currently being waged over military payday loans in Congress, Dr. William Brown, Jr., an Associate Professor in the Department of Accounting and Finance at the University of North Carolina at Greensboro, has landed a blow for cash advance supporters.

The doctor testified vefore the U.S. Senate Committee on Banking, Housing and Urban Affairs during "A Review of the Department of Defense's Report on Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents."

Dr. Brown is the co-author of an important academic study on this topic, "Payday Loan Attitudes and Usage Among Enlisted Military Personnel," which was released on June 27, 2006. He reviewed the key findings from the first of its kind empirical study of the short term credit needs of U.S. Military enlisted personnel, as well as the methodology and scholarship of the recent Department of Defense report that challenged these supposedly harmful instant payday loans.

Here is his paraphrased testimony:

Over the past two years, I have conducted research on payday lending, military compensation and the use of payday loans by military personal. In June of this year, I released a study with my colleague, Dr. Charles B. Cushman, Jr. from The George Washington University, of payday loan attitudes and usage among enlisted military personnel. Our results are cited on several occasions in the Department of Defense Report.

Our study surveyed U.S. enlisted personnel in four branches of the armed services regarding their attitudes toward, and usage of, short-term credit, including payday loans. Our survey is the first systematic survey of enlisted military personnel regarding their economic circumstances and attitudes toward short-term credit. Our analysis is based on empirical data that we collected through a random sample of enlisted military personnel who live near military bases in the United States.

Our results indicate that 13% of the 460 enlisted personnel that lived around military bases and responded to our survey had obtained [short term payday loans] in the previous year. It is important to note that these numbers are only for enlisted personnel and not all military personnel. It is suggested in the Department of Defense report and elsewhere that our number indicates a higher incidence of payday loan use by members of the military than the general population.

However, our results do not provide such a comparison. One would need to compare enlisted personnel with a civilian population of similar age and income in order to make such a comparison. Otherwise, it is an apples to oranges comparison.

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On the eve of Pentagon testimony about predatory lending operations that target service members, the House Veterans’ Affairs Committee chairman appears ready to bargain on a cap on interest rates for payday loans to military members in the 2007 defense authorization bill.

Rep. Steve Buyer (R-Ind), the veterans’ committee chairman, had opposed Senate-led language capping interest rates at 36 percent for cash loans to military members and their immediate families because he didn’t think it was a defense-related issue.

However, his position reportedly softened in a closed door meeting on Tuesday with House and Senate negotiators.

New payday loan view: Buyer said he would still have preferred separate legislation on the issue, but he told negotiators he would not oppose an interest cap on instant payday loans, as long as it was part of military-related law and didn’t change veterans’ laws, according to three sources who attended the meeting.

With that concession, negotiators from the House and Senate armed services committees who are writing a compromise version of the bill are prepared to accept the Senate provision, although details must still be worked out.

Later today, David S.C. Chu - the undersecretary of defense for personnel and readiness - will testify before the Senate Banking, Housing and Urban Affairs Committee, about the harm that high-interest rate short-term loans are doing to military families.

We'll keep you apprised of this important payday advance story as it develops.

Why have military payday loans managed to gain the support of both political parties? Perhaps an inside look at one soldier's battle with them will reveal the basis.

Charles Brown, a former airman at Cannon Air Force Base, said he found himself in financial trouble when the use of payday loans online became a vicious cycle in his life.

Brown entered the military with bills. Therefore, he turned to payday advance providers to stay afloat. It was a mistake.

“Once we got everything taken care of and paid off, things would be fine, and something would happen and there would not be enough money to cover something, so we’d do it again. It’s just a repetitive cycle that seems to never end,” he said.

The fast payday loans piled up and piled up. There were too many of them. Slowly paying off the debts acquired during the past four years, Brown said, “Everybody says, hey, Friday’s payday. I say, yeah, it’s payday and I go to town (to repay the loan). I spend my whole check before I realize I’ve even gotten it. Where’s the reward in that?”

It's easy to see his point - along with that o the Pentagon, which recently recommended that this issue receive a close look by Congress. It's in that stage now, and the future of cash advance loans to the military may be in danger.

People are entitled to change their minds. Just ask Alabama Senator Lowell Barron.

Not only has Barron gotten out of the industry in which he was once a major player - bad credit payday loans - but he's planning legislation against it now.

Barron outlined his reform plans this week in a meeting with editors/reporters of The Huntsville Times. He was accompanied by media and political consultant Steve Raby, who is working on Barron's re-election campaign.

The main focus of the senator's efforts? A ban on"rollover" payday cash loans that can quickly rack up hefty interest charges. His bill would also prohibit payday advance lenders from operating within five miles of a military base and outlaw the seizure of personal property on bad loans made by quick cash outlets.

Barron's opponent in the November election, Republican Don Stout of Fort Payne, suspects the reform push is driven more by Barron's re-election hopes than a desire to clean up an industry Barron profited from.

"That's like closing the barn door after the mule is out," Stout said Wednesday. "He's been in this business for years. I just wonder if he plans to give any of these people their money back."

Stout said recent political polls in their state Senate district, which encompasses DeKalb and Jackson counties and part of Madison County, have shown broad public disfavor with the faxless payday loan industry.

A payday advance past: A 2005 financial disclosure form filed by Barron with the Alabama Ethics Commission in April listed financial ties to numerous payday loan businesses.

But he and his family sold any interest in any stores months ago.

Officials with Alabama Arise, an advocacy group for the poor, said while they would prefer banning cash loan operations like Georgia has done, they welcome reforms that would protect consumers from getting gouged.

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Not everyone is taken the pressing consumer debt problems in the country sitting down.

Ok, well, Scott Tucker may be sitting down when he aims his wrath at payday advance lenders - but he's doing it in front of his website, fromdebttosavings.com.

Tucker is aware that Americans today owe well over $2 trillion in debt - yes, that's trillion and, yes, the figure is constantly on the rise. Tucker believes not enough is being done about credit card and faxless payday loan providers.

He says fiscal problems are" because of the cynical and unfair practices of unscrupulous lenders, which are for the most part the banks and credit card companies … Credit companies make the most of their profits from so- called 'bad-debt' or 'high-risk' debtors - the lower your credit score the more they treat you as a risk, unfairly discriminating against you by assuming you will not keep up with your payments."

Tucker's stance reveals an alarming development that should concern all Americans, while uncovering a hidden dark side to these lending institutions.
Yet what makes the situation even more disturbing is the fact that these cynical practices target the people who can least afford to pay, and draws them unwittingly even deeper into a downward spiral of debt. That's the main critique of no fax payday loans across the boad.

"This," said Tucker, "is something that affects all Americans everywhere, because it's what's driving us to recession. It's not your fault if you fell for the lies and deceit of these 'fat cats.' And the quicker we get out of the cash-flow crunch, the quicker we'll help ourselves as individuals and get the wider economy back on track."

Tucker said he put together his website "to give the blameless victims of the predatory lenders a fighting chance to break free of debt."

It's an admirable goal. Of course, some cash loan lenders really do help the poor. So it's important to make a distinction.

This is interesting. While any sort of crackdown on payday loans in Canada may not be high on the government's list, a major advocate from that industry is actually welcoming possible changes.

Michael Thompson is telling the provincial government to basically bring on the red tape.

The president of the Canadian Payday Loan Association said the industry would be better off if government brought in new rules that all in the industry would have to follow. Roughly two-thirds of all Canadian quick payday loan companies are part of this association.

They abide by what he calls "really strict" voluntary regulations.The others don't. Therein lies the problem.

"We believe, just from a fundamental business perspective, a protected consumer is a happy customer. So we think it's the right thing to do," he said.

New regulations would also make it easier for businesses to operate in different provinces, always a goal of any fast cash loan chain.

Thompson said the most important restriction is a ban on "rollovers," where companies aren't allowed to push back due dates for a fee. As the date gets pushed back, the debt increases.

Other regulations would include setting a maximum loan of $1,500 and not having a term longer than 31 days.

"There's been some controversy around the industry, which hasn't been very positive for the industry in a way. We think that having regulation in place will clarify a lot of the issues … so everybody knows exactly how it operates and how it conducts its business.

Association numbers suggest between 1.5 million to two million Canadians use payday loans online. The average loan is $280.

"The province of Nova Scotia has said it wants to regulate and we totally support that. We came down here today to start working with them to provide them an industry perspective on the right way to go," Thompson stated.

Service Nova Scotia and Municipal Relations spokeswoman Lenore Bromley said the deputy minister met with Thompson. It was called a "useful discussion forum that allowed us to listen to, and exchange views on, current legislative proposals," she said.

It's all worth keeping an eye on. Rarely does a government claim that an issue isn't pressing, only to have those within the payday advance world call for regulations. On itself.

It started with different kinds of cheap payday loans. The city of racine placed restrictions on such cash advances. Now, pawn shops may receive the same treatment.

The Journal Times, however, is reporting that a local man who intends to open a pawn shop is hoping to fight back. Monday, the License and Welfare Committee deferred action for two weeks on Terry Jackson’s application for a second-hand dealer’s license.

Jackson has a lease on the storefront at 949 Washington Ave., where he hopes to open what would be Racine’s only pure pawn shop. The committee, however, went ahead and also unanimously recommended a 90-day moratorium on pawn shops, looking to analyze them with the same scrutiny previously reserved for cash loans.

The action came at 11th District Alderman Greg Helding’s urging.

“I don’t know Terry Jackson,” he said Tuesday. “It’s nothing against him personally.”

Helding said quick payday advance shops proliferated before the city council got around to reining in their growth. With pawn shops, “I want to fix it before it becomes a problem.”

Committee Chairman David Maack agreed with Helding.

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You often hear arguments about how no faxing payday loans prey on the poor.

But what about the elderly?

In Missouri, the Department of Health and Senior Services will deny nursing home operators' renewal requests to operate on-site payday loan operations that lend money to the nursing homes' employees, Missouri Governor Matt Blunt said Tuesday.

Right now, approximately 60 nursing homes around the state operate payday loan operations in their facilities. The department also will deny future requests, the release said.

"Payday loans typically charge exorbitant amounts in interest for those who borrow from them," Blunt said in a statement. "Employers should not be making money off the wages they pay their hardworking long-term care facility employees."

Blunt said long-term care rules allow only activities necessary to or directly related to the administration of the facility to operate within the facility. That would certainly NOT include the use of same day payday loans.

The existing on-site payday advance operations would have to be renewed beginning the end of August. But that is a non-issue now.