Virginia Legislator Fails to Crack Down on Payday Loans
By Paul RizzoPayday Loan Writer
What more evidence do they need?
The state legislators who are so willing to do the bidding of a predatory business should check the latest evidence. The numbers for 2006 are in, and what they reveal is that the amount of misery and destruction wrought by faxless payday advance lenders is growing.
These short-term lenders tempt people in distress to take a step that too often pushes them down a financial rabbit hole, one it’s hard to climb out of. They prey on people in crises, with few resources. They charge fees that are flagrantly usurious: The average rate on a fast payday loan in Virginia last year, expressed as an annual percentage rate, was 368 percent, and they went as high as 782 percent.
No matter how the industry’s lobbyists spin it, these are Tony Soprano numbers.
Add in all these conditions, and you have a situation in which borrowers take on loans they can’t repay. So they roll them over, again and again, until their obligation grows so unsupportable it pushes them over the brink.
Legislators had plenty of chances this year to fix the mess they created when they invited providers of faxless payday loans into Virginia. They had good bills before them, to bring the interest rate down to a level that passes the conscience test, the same 36 percent that applies to other small consumer loans and to payday lending to the military.
While the payday lending industry likes to say it simply offers a solution to short-term needs that people should and do use prudently, the data prove otherwise. The typical Virginian who took out a guaranteed payday loan in 2006 ended up taking out 8.3 loans. Two-thirds of the 433,537 borrowers took out more than one loan.
While there were slightly fewer borrowers last year, they borrowed more money, and more often. That’s dangerous.
And 96,831 Virginians took out at least 13 payday cash advances - a condition that could be described as an addiction. That’s 96,831 pieces of evidence that the General Assembly is letting Virginians down, letting down those who most need protection.
As if more bad news is needed, the number of lawsuits by lenders against borrowers who couldn’t repay shot up 38 percent in 2006. Suits were filed against 12,486 borrowers, 21/2 times the total three years ago.
That’s another 12,486 pieces of evidence that state legislators failed at serving the public interest, in their insistence on serving a cash loan online industry that lobbies hard and gives them lots of money ($179,000 in 2006 alone).
The only two local legislators who stand out as champions for the right side of this issue are Republican Dels. Harvey Morgan of Middlesex and Glenn Oder of Newport News. Voters should keep that in mind this fall. Every seat in the General Assembly will be up for grabs on Election Day.
So ask the candidates what they would do about quick cash advance lending. And ask the incumbents why they didn’t do something when they had the chance.
SOURCE: The Daily Press
