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Not even the free-market conservatives who control the House of Delegates are willing any longer to defend the predatory practices of the commonwealth’s payday lenders.
House Republican leaders have enlisted in a gathering moral and political consensus shocked by the industry’s excesses.
On Monday Speaker Bill Howell and other senior GOP delegates joined with the Virginia Legislative Black Caucus to unveil a bipartisan reform proposal. That unlikely alliance spans the political spectrum and sends an unmistakable message that payday lenders must clean up their house or face having it shut down. It is politically important because it recognizes the futility of relying solely on truth-in-lending kinds of warnings for consumers.
The best way to deal with payday lenders is to make them abide by the 36 percent interest rate ceiling that applies to all other lenders. That would stop them from trapping Virginians in a cycle of debt.
The new plan is neither as simple nor as foolproof. But it represents an earnest effort to end practices that have put thousands of Virginians in a financial quagmire.
The bill sponsored by Newport News Republican Del. Glenn Oder offers several important safeguards. It allows a payday customer to have only one loan of up to $500 outstanding at any time. It limits individuals to five loans a year. It imposes a mandatory 24-hour cooling off period between loans.
Oder compares his bill to a rope in a pool that warns swimmers when they are drifting into deep water. His goal is to help people avoid getting too deep into debt.
Even if his bill becomes law, payday lenders would still be permitted to charge interest and fees equivalent to an annual rate that could exceed 100 percent or even 200 percent in some cases. That may not seem like much in the way of consumer protection, but payday lenders are currently allowed to charge fees equal to a 391 percent interest rate.
While not perfect, Oder’s bill is an acknowledgment of the political reality at the state Capitol. Payday lenders stroked checks for more than $245,000 to political campaigns last year, and they have many powerful friends in the legislature. Chief among them is Senate Majority Leader Richard Saslaw, a Democrat who controls the committee that reviews financial bills.
Saslaw has set up a panel, headed by Sen. Ken Stolle of Virginia Beach, to look at options for reforming the payday industry. Stolle is an ally of payday lenders.
If the senators cannot find it in their hearts to support a 36 percent interest rate cap, the House now offers an option that better protects people from taking on more debt than they can manage.
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The iPhone, which is Apple's
The iPhone, which is Apple's most popular product on the market, is currently sold by a few large retailers including Best Buy, AT&T and of course, Apple Stores. At this time, however, it appears there is a new retailer being added to that list – Wal-Mart. As always, Wal-Mart’s objective to provide consumers with the lowest prices on consumer products will take effect – they will offer the iPhone for two dollars less than any other retailer. It may not seem like a huge discount, but I guess a little savings beats out no savings at all. Apple obviously is aware of the tremendous traffic seen at the nation’s largest discount retail store, and wants to take advantage of it. Wal-Mart would certainly profit from the deal since it will help increase their consumer electronic sales. Click here to read more on the payday loan store.
danielm
A friend of mine is caught up in these. The problem is such... You have to present a pay stub at loan time, if you are paid weekly, you have to pay back weekly...75.00x52=3900.00... You can have 3 or 4 of these running open at the same time... That's 11,700 to 15,600 a year... Not 700.00... But dont get me wrong here either... I totally agree with you, it is thier money, let them choose how to spend it. They're gonna be in the poor house when and/or if this bill becomes law having them all come due and not being able to pay them right back... That will teach them all.
Toodles
Don't worry, Gabrielle
Here's my predicition:
When interest rates get capped at 36%, payday lenders will post a sign that states "Processing fee of $15 per $100 borrowed."
The industry will go on, and we will remain free to make poor choices.
jmo
How is this a cycle of debt?
What is the big deal? Even if someone borrows $500 each month, giving them a check for $575, that is only $900 extra a year in fees. I doubt $900 a year is going to send him/her into poverty. They earned the money, why can't they buy with it what they want? A lot of people spend $900 a year on Starbucks. I can give $900 a year to a church, goodwill, or the homeless guy down the street, or I can go to a movie every Friday night, but I am not allowed to choose to spend it on using the payday service? It is my money.
Just great
More feel good legislation to protect people from themselves. Has the concept of personal responsibility totally flown out of the lexicon of Virginians?