Payday Loan Reform on the Way in Alabama?
State Rep. James E. Buskey thinks it’s time to rethink Alabama’s 3-year-old payday lending law.
This comes as no shock . The Mobile Democrat fought in vain earlier this decade to stop legalization of payday loans in Alabama.
What is surprising is that Lowell R. Barron could be right there with Buskey. The Alabama Senate president pro tem announced during his successful 2006 re-election campaign that he was selling his interest in a quick payday advance chain and would support reform.
“When I heard that,” Buskey said, “I wanted to jump for joy.”
Barron has since opted to step down as Senate leader. But the Fyffe Democrat is expected to remain in the Senate and wield some influence there.
Much as Buskey would like to run cash advance lenders out of the state, as Georgia and North Carolina did, he said he would settle for repeal of the industry’s exemption from Alabama’s usury laws. “They’re wreaking havoc,” Buskey said of payday lenders.
In 2005, after years of litigation, the Alabama Supreme Court ruled that payday lenders should have been regulated under the state’s Small Loan Act before the 2003 legalization of the industry. The Small Loan Act sets a maximum annual interest rate of 36 percent. The legislators allow payday lenders to charge 456 percent.
Ron Gilbert, policy analyst at the citizen advocacy group Alabama Arise, said legislators never should have taken the bait from instant cash loan industry lobbyists before the high court ruled.
“The issue was always framed as, ‘we need to be regulated,’ ” recalled Gilbert. “Our answer was: ‘No, they’re illegal. Don’t legalize them.’ ”
If legalization is repealed, Buskey said he favors letting the Supreme Court ruling prevail. Advance America, Cash Advance Centers Inc. spokesman Jamie Fulmer said the industry cannot survive with just 36 percent interest on the high-risk loans.
Scott W. Corscadden, the state’s chief regulator of no fax payday loan lenders, said he hasn’t heard of any concrete reform proposals for the 2007 legislation session.
“But I wouldn’t be shocked if something was percolating out there,” Corscadden added.