Monday, July 9, 2007

The following is an editorial from The Viriginia Times-Dispatch, focusing on the state’s payday loan lending fight:

The fight over payday lending is like pulp fiction: There’s a tawdry story line. Profit bests principle. A tough guy is anything but.

• In March, barely a month after the legislature quits, lobbyists for payday advance lenders herd into a Richmond law office to tell their clients to steel for the next phase of a brawl that already has cost them a ton in legal fees, crummy press and campaign contributions.
• In May, a Peninsula businessman, who has bailed out employees swamped by debts to payday lenders, teams up with two retired U.S. Treasury guys to launch the latest group committed to shuttering the nearly 800 money stores here.
• About the same time, the State Corporation Commission –of which a former judge, Clint Miller, has signed on as a lobbyist for payday lenders’ crude kin, car-title lenders - reports that instant payday loan lenders are handing over more cash to fewer borrowers and filing more lawsuits against alleged deadbeats.

In other words, people who might not qualify for credit in the first place are discovering a second, costlier way to stick it to themselves: getting sued.

• In June, pro’s and anti’s cross paths at big-dollar fundraisers for General Assembly Republicans and Democrats. The pro’s - perhaps because they didn’t think to do it - are still steamed over cash advance payday loan ads the anti’s ran in the program for the Dems’ event.

• And last week, Gov. Tim Kaine renews his call for a crackdown on the high-cost, instant personal loan industry, blowing the cover on one of the worst-kept secrets in town: that both sides are warily talking about a possible deal, brokered by Kaine aide Mark Rubin.

This can’t be good news for foes of payday lending. They want to put it out of business or put it on a leash. Read: Restrict sky’s-the-limit interest rates to 36 percent. Kaine isn’t committing to either.

His nuanced pronouncement may mean that Kaine, distaste for subprime-ates notwithstanding, doesn’t want this issue threatening his legacy-building agenda in the 2008 legislature.

The industry is worried, too. It wants an agreement because the General Assembly could change after November. The votes to keep providers of cheap payday loans alive are concentrated in areas where, because of population or prosperity, there are few cash shops.

Such indemnification won’t last forever; a deal is a better than another black eye. Or another. Or another.

When Kaine weighed in on payday lending during the 2007 assembly, it was a move by a fellow Democrat, Senate Minority Leader Dick Saslaw, that dashed substantive restrictions for the year.

Saslaw, who as his party’s Senate boss can make Kaine’s life lousy or lovely, yanked an industry-written “reform” bill. In doing the bidding of payday loan lenders, Saslaw stopped Kaine from doing a number on them.

Without a bill - credit the lenders’ skilled lead lobbyist, Reggie Jones, who also represents their potential competitors, credit unions - Kaine was helpless to force a vote on what he’d led many to believe was a non-negotiable demand: a 36 percent interest-rate cap.

The cash loan online lenders say that’s a deal-breaker; that it would drive them out of business by slashing rates to pennies on the dollar.

Since when is it the legislature’s job to guarantee a profit for any business, other than maybe regulated public-service corporations such as electric utilities?

This entry was posted on Monday, July 9th, 2007 at 1:34 pm and is filed under Virginia.