Disturbing silence on predatory loans

Individual members of the Virginia Legislative Black Caucus have been bold advocates for curbs on predatory lending, but it's disappointing to see that the group as a whole remains bashful about confronting the scurrilous and destructive industry.

Advocates for reform took hope last week that the caucus would formally back a 36 percent interest rate cap on all small consumer loans, but the announcement never arrived.

Caucus chairman Kenneth Alexander of Norfolk said his staff circulated a draft of a letter favoring the cap but added "the staff may have gotten ahead of the caucus."

Alexander serves on a committee studying whether new restrictions are needed on car title loans.

"It would be very inappropriate for me as chairman of the caucus... to pre-empt the committee's work by taking a position," he said this week. "If you're on a committee you should be very open and sincere and leave all of your biases and check that stuff at the door."

Lawmakers on the committee who support payday and title lenders have not embraced that noble advice.

Senate Majority Leader Richard Saslaw and Sen. Thomas Norment of James City have been bellicose in their opposition to meaningful industry reforms. The black caucus could serve as a crucial counterbalance in the debate, but instead it is missing in action despite being called out by NAACP Chairman Julian Bond for their silence.

Sen. Mamie Locke of Hampton and other caucus members deserve credit for their efforts to win reforms, but they are undermined by their organization's cozy financial relationship with payday and title loan companies. This spring, Community Loans of America gave $2,500 to the caucus. The caucus is the second largest recipient of donations from the company after House Speaker Bill Howell. Individual members have also shared in the bounty, including Del. Algie Howell of Norfolk, who collected a $500 check this year, according to the Virginia Public Access Project. Howell said he nevertheless supports a 36 percent interest rate cap.

Predatory lenders are eager to make friends because they're pushing legislation that would formally recognize them as a legitimate industry under state law.

That's a mistake Virginia has already made once with payday lenders, and one that the state and hundreds of families lured by unscrupulous practices are still paying for today.

In Tennessee, which has granted title lenders recognition, the companies charge annual interest rates between 120 percent and 360 percent and a majority of the businesses routinely repossess the vehicles of customers trapped by excessive debts.

The Hampton Roads Chamber of Commerce and other respected business groups recognize the folly of that approach. They support a 36 percent interest rate cap because they understand the harm predatory lending has visited on their communities. Many members of the black caucus also live in the region and have witnessed those same abuses. It's time for the group to take a stand.