Monday, October 8, 2007

Following in the footsteps of their northern neighbor, Waynesboro, VA leaders will consider petitioning for stricter payday loan lending laws, an issue the state has struggled with unsuccessfully for years.

Inspired by a parallel motion endorsed last month by Staunton, the Waynesboro City Council plans to formally ask the General Assembly to put an interest cap on the booming lending industry, whose current annual rates approach 400 percent.

“If you can’t afford to live from paycheck to paycheck, you can’t afford those kinds of interest rates,” said Vice Mayor Nancy Dowdy, who put the cash advance payday loan issue on the city’s agenda. “I have a real problem with people in a crisis situation being taken advantage of like that.”

After years of growing increasingly concerned about the impact of such lending, she said, this was a welcome opportunity to voice the city’s position. She credited Staunton’s resolution - believed to be the first of its kind in the state - with creating a “template” for others.

Passed on a unanimous vote, the Staunton measure asks for a 36-percent interest cap on all personal cash loan lending, the same ceiling by which most other small loan providers in Virginia must abide

Calls for such a restriction have been common among those who consider the payday loan business predatorial, but protested by industry lenders themselves on the grounds it would devastate their profit margins and effectively run them out of the state.

City Councilman Tim Williams, who expressed reservations about restricting a law-abiding business, said he’s heard from residents who’ve been helped by faxless payday loans over the years.

“I don’t want to see them put out of business,” he said. “I understand some people think they’re predatorial, but by the same token, I think the state lottery is predatorial. I don’t think the state’s going to do anything about that, though.”

Williams said he would still likely vote for the pending resolution, noting it was merely advisory and that 36 percent still seemed a high level of interest.

Although Virginia cities and counties have no power themselves to impose a cap, it’s hoped a strong show of support for the Staunton resolution will prod state legislators into action. Repeated attempts to pass an interest cap on fast payday loans have always failed in the General Assembly.

Last week, the Harrisonburg City Council gave its stamp of approval to the call for tougher regulations and still other communities are considering following suit.

“We’ve had more people call to say they’re going to pass it than not,” said Staunton spokesman Doug Cochran.

This entry was posted on Monday, October 8th, 2007 at 3:14 pm and is filed under Virginia.