Monday, February 26, 2007

Efforts to place modest reforms on the Virginia payday loan lending industry died Saturday when negotiations broke down in the General Assembly’s final hours.

Sen. Richard Saslaw, D-Fairfax, said industry representatives, consumer advocates and Gov. Timothy M. Kaine couldn’t agree on restrictions that would protect those who use the short-term, high interest loans without putting payday lenders out of business.

Saslaw’s industry-backed bill would have placed limits on the number of loans individuals could have at one time and required lenders to give overextended borrowers more time to pay.

Legislators voted earlier in the week to send Kaine the bill, but reneged for fear that he would place on it annual interest rate caps. Instead, House and Senate “conferees” tried to work out differences before lawmakers adjourned on Saturday.

Whether an agreement was in sight depended upon whom you asked.

“If we had more time we could have reached an agreement,” said Reggie Jones, a lobbyist for the cash advance online industry. “I feel like we were so close.”

Payday loan lending opponents claimed the industry was unwilling to accept “real reforms,” such as an interest rate cap or a limit on the number of loans individuals could have each year.

“We want to protect people and they want to protect profits, and that seems to be the sticking point,” said the Rev. C. Douglas Smith, a member of the Virginia Partnership to Encourage Responsible Lending, a coalition of 25 faith, business and civic groups that oppose the use of online payday loans.

Both sides said they were disappointed that nothing was accomplished. The session started with more than a dozen bills to either reform the industry or repeal the 2002 law that allowed payday lenders to charge more than 36 percent interest.

Kaine had threatened to make “significant changes” to the bill if he got the chance. While he supported a 36 percent interest rate cap, he had said he didn’t believe legislators would go along.

Kaine said Saturday the fast cash loan issue would be back.

“They can pull the bill this year, but you know, was it Joe Lewis who said, ‘You can run but you can’t hide,”‘ Kaine told reporters.

No credit check payday loan lenders charge $15 for every $100 loaned up to $500, which average out to an almost 390 percent interest rate if renewed every two weeks. The lender holds the customer’s check until his or her next payday, when the borrower either pays off the loan or the lender cashes the check.

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This entry was posted on Monday, February 26th, 2007 at 7:03 am and is filed under Virginia.