The Senate commerce and law committee today endorsed sweeping restrictions on payday lending, sending the bill to the full Senate for approval. The full Senate must act on the bill by the end of the day, the deadline for each house to finish its legislation.
The House of Delegates last week reached a bi-partisan agreement to strictly limit payday loan makers, including placing a 36 percent cap on annual interest rates and hold the number of loans borrowers can receive at five a year.
The committee's bill -- SB 588 -- does not include the five-a-year limit, but it offers other provisions that senators said would help to break the cycle of debt and stop the loans from being offered to people who rely on them to meet monthly expenses, not for unexpected or emergency bills.
The Senate bill would stop any new payday loan operations from locating with 1.5 miles of a current loan shop. Sen. Dick Saslaw (D-Fairfax), the committee chairman, said that would help to reduce the number of loan operations in areas already saturated with them.
"I have a feeling that’s going to close about a third of the payday loan shops operating in Virginia," Saslaw said of the bill's provisions.
Since lawmakers liberalized payday lending laws in Virginia in 2002, about 800 stores opened for business. In 2006, according to the state corporation commission, they loaned more than $1.5 billion to Virginians. The average borrower took out eight loans a year, it found.
The bill passed 13-1-1. The only member to vote against it was Sen. Donald McEachin (D-Henrico), who said "We can do better" after casting his vote. Sen. Ralph Northam (D-Norfolk) abstained from voting on the bill.
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What about Banks?
I guess the payday lending places are more important than the Banks charging a five dollar check cashing fee for payroll checks or commercial accounts only, yet, if you have a personal check, there is no fee. "Are you aware there is a five dollar fee for cashing the check but if you open an account we will waive the fee," stated the teller. Interesting thing though, the manager stated, "we don't want to become a check cashing place." Wowww... Yet, businesses don't even know that they are breaking the law because Virginia Law states, "payroll checks must be at face value." Oops, payroll check minus five dollar fee equals "no longer at face value." Yet, none of our elected Delegates nor State Senators want to put it on their legislative package. Hmmmm... I guess useless bills are more important. I know, I know, why didn't the person open an account? That's not the point nor relevant to the issue! Commercial accounts pay for this service through various fees. I wonder how much they pocket by fleecing the American workers with this frivolous fee.
Much More wrong with Senate Bill
How's this? SB 588 allows payday lenders to electronically debit borrowers bank accounts. If the Democrats and Saslaw think this is reform, they're seriously misguided.
Saved by our Legislators
Really comforting that our Legislators are willing to save us from making bad financial decisions, but don't recognize the danger of cell telephone use by drivers, and don't care about controlling smoking in public spaces. The former problem may not be pleasant, but the two latter problems can cause death.