Georgia House Split on Payday Advance Loan Issue
By Paul RizzoPayday Loan Writer
The issues of payday advances in Georgia is far from dead, as the House remains split on the issue.
“Let’s limit government, let’s accept that people want to exercise their own personal responsibility - I know that’s a shocking concept - and let’s support the people of Georgia and promote their own freedom and interests,” said Rep. Earl Ehrhart, the chairman of the powerful Rules Committee, in a discussion about returning Georgia payday loans to the state.
Opponents countered that the lenders were outlawed because they trapped the neediest Georgians into an endless cycle of loans, and that repealing the ban will allow crooked companies to return.
“No matter how many revisions, no matter how many attempts to compromise, it still is a bad bill,” said state Rep. Virgil Fludd, D-Fayetteville. “It’s bad public policy to submit to take advantage of Georgia consumers who are in financial need. It’s bad public policy to lock consumers into a long cycle of debt.”
The proposal would limit customers to borrowing the equivalent of 25 percent of their monthly income and a five-day “cool off” period between fast cash loans that bans lenders from rolling them over from month-to-month. It also calls for a $1,000 fine per violation.
The payday industry has been clamoring to return to Georgia since the ban was enacted in 2004, saying there’s a need for their services from Georgians with credit so poor they can’t turn to banks for emergency funds. The lenders and their supporters argue that the measure is still one of the stiffest in the nation.
“This bill is about a free and open market and transparency,” said state Rep. Steve “Thunder” Tumlin, the Marietta Republican who sponsored the bill. “It does not turn back the hand of time. It brings forth new regulators and new regulations.”
Some also compared the quick payday loan lending fees to $25 fines that banks charge customers who overdraw from their checking accounts. “This happens every single day in the state,” said state Rep. Terry Barnard, R-Glennville, and a banker. “Get real. Vote for the bill.”
Critics, meanwhile, warned that Georgia is relaxing its payday lending restrictions as the federal government and other states are cracking down on the industry.
Last year, Congress imposed a 36 percent annual percentage rate cap on online payday loans to military service members after reports showed thousands of troops in debt to payday lenders.
At least 12 states prohibit triple-digit rates on payday loans, a cap that effectively bans payday lending, according to Jean Ann Fox with the Consumer Federation of America. Dozens of other states are also considering proposals to ban payday lenders.
“For once, we’ve done something very good in this state and other states are looking at us,” said state Rep. Carolyn Hugley, D-Columbus. “It’s time for us to stay the course and not look back.”
Next week, House lawmakers will likely get another crack at the faxless cash advance bill, which managed to enrage consumer watchdog groups, the AARP and many liberal legislators while earning the support of a handful of key black Democrats, including state Rep. Al Williams, chairman of the Legislative Black Caucus.
The split has fractured the normally solid black caucus, but the majority of the caucus still opposed the measure and played a key role in its defeat.
As state Rep. Winfred Dukes, D-Albany, summed it up: “Every now and then, follow-ship has to go against leadership in order to keep leadership from wrecking the ship.”