Pecking at the payday birds

SB 1470 has passed the General Assembly and will soon be on the governor's desk. It prohibits payday lenders from offering open-end lines of credit. The predatory lenders began offering these lines of credit after the legislature placed modest limits on their lending practices. The open-ended loans have no cap on interest and their use is generally seen as a way to dodge the law passed last year.

But, there is something fowl about this bill - it does not include any regulation of increasingly pervasive car title lenders. Virginia should have real limits and real regulatory teeth of both payday and car title lenders. Governor Tim Kaine hasn't said what he'll do with the bill. Sign it and accept a half-baked bird.... err, bill that may take the wind out of the wings of future action. Or veto it and tell the legislature to get it right next year.

Given that this is Kaine's last year, that the predators will probably lavish House candidates with grist this November, and we don't know who will be the commonwealth's Big Bird this time next year, CCC urges Governor Kaine to sign SB 1470. A glass half full is better than one totally empty.

Fox in the General Assembly Hen House

Predatory payday and car title foxes appear to have again snuck into and out of the Richmond hen house with all the eggs.

CCC has often commented (here's one) on the payday and car title lenders shameful practices that rip off consumers - usually ones who have fallen upon hard times and don't take time to understand the consequences of dealing with these predators. This year, our lawmakers, who are supposed to look out for the common good, have again helped these foxes to all the eggs they want.

This session there were bills to regulate these lenders and to end the use of open-end loans which came into use as a way to dodge last year's weak regulations. The industry responded by deploying a dozen or more lobbyists to prowl the halls and elevators of the General Assembly Building, reminding legislators of past campaign contributions and the promise of more to come. Lobbyist Jeff Smith, representing the Virginia Financial Services Association, a group representing small lenders which are not involved in payday or car title lending, warning that the bills would knock those lenders out of revolving loans and could affect employment at HSBC, a British bank with a processing center in SE Virginia.

Smith was either wrong or conveniently misrepresented the truth - HSBC would not be affected by the bills. More troubling is Smith's apparent amnesia about his also representing Consumer Loans of America, one of the nation's largest payday and car title lenders.

It is easy chop off Jeff Smith's head for his "lobbying" activities. But, it is far more appropriate to ask our legislators what the cluck they are thinking. Or, if they are thinking at all. I guess they were just too busy denying the right to vote to former felons, making sure Virginia remains a right-to-work state, and teaching elementary kids about all the benefits of marriage to enact some reasonable restrictions on these vicious predators.

More info in prior posts and here.

Grist from the General Assembly

The Senate passed SB 1470 that would end open-ended credit lines by payday lenders. Now a House committee has endorsed similar legislation in HB 1709. After the weak regulations passed last year, some payday lenders tried to dodge the intent of the legislation by offering the open-end loans with no limits on interest rates. Hopefully, our wise legislators will move to crack down on car title lenders as well. How about limiting rates on the usurious "rapid refund loans" at the storefront tax preparers, too.

A Senate committee passed SB 827 to require instruction in the "benefits, challenges, responsibilities and value" of marriage in the family life curriculum fro grades K-12. The House has already passed similar legislation. In a prior post, CCC was critical of this feel-good legislation that is at best redundant. It was amended in the Senate to include "challenges and responsibilities" of marriage - perhaps a slight improvement. The bill has received support by such diverse groups as the Family Foundation of Virginia and the Equality Virginia.  

Bill, bills, bills...

With the General Assembly nearing the midway point, each house is wrapping up work on their own bills. Several of interest to CCC are still alive while others have hit the chopping block.

HJ 628 will allow restoration of voting rights of nonviolent felons who have completed their sentences. It awaits vote in the Privileges and Elections committee. Contact members to urge them to vote yes and end this holdover from the Jim Crow era. After all, shouldn't it be the policy of the New Dominion (as opposed to the Byrd era) to restore people to the community and to encourage voting? If HJ 628 passes the House, its chances are excellent in the Senate.

HB 2465 protects the right of citizens to petition the court for removal of a public official without fearing dismissal or sanctions because of a minor clerical or procedural error. It passed the Privileges and Elections Committee by a vote of 13-8 and is before the full House. Contact your delegate to urge passage.

SB 810 allows in-person absentee voting without giving an excuse. It passed the Senate 24-16 but faces an uncertain future in a more hostile House. It is never too early to begin lobbying your delegate for passage.

SB 1470 passed the Senate yesterday. It prohibits payday lenders from making open-ended loans. It does not include the car title lenders as SB 1490 would do. SB 1490 is still in the Commerce and Labor Committee. Contact your Senator and tell them to include both payday and car title lenders. Better yet, tell them to impose a mandatory 36% maximum APR, which includes all fees. More info. 

SB 961, Senator Mark Obenshain's bill to eliminate the "triggerman rule" passed the Senate. It would allow the imposition of the death penalty not only for the shooter, but also for accessories and principals in the second degree. The death penalty is morally wrong, an ineffective deterrent, and usually results in long and expensive appeals. Virginia has one of the broadest death penalty laws in the country and its expansion will not make us any safer. SB 961 will probably pass the House, but Governor Tim Kaine has indicated he will veto it. Stay tuned and urge the Governor to stand strong.

Senator Obenshain's bill to privatize Virginia's ABC stores died yesterday in the Rehabilitation and Services Committee on a 13-2 vote. Splitting from his neighbor, Senator Emmett Hanger voted against the bill. CCC supports the concept of private ownership of liquor sales but there are significant problems to overcome. Some are known, but as always, beware unintended consequences! Obenshain says no jobs would be lost, but current employees would be displaced and/or potentially lose retirement benefits. Obenshain says it will increase state revenues, but would that be true a decade or two from now? We might replace the state monopoly with a oligopoly where a few big dogs control alcohol sales for private profit. Some states have experienced corruption in the ownership and transfer of licenses. Perhaps the time to privatize ABC stores will come in the future, after more study and more than a half-baked attempt to anticipate problems that could adversely impact Virginia and valued state employees. Maybe it is time to refer this issue to JLARC for an in-depth and bipartisan look.

Hey Richmond: I told you so

Hate to say "I told ya so," but I and many others told the 2008 session of the General Assembly that their toothless reforms of the payday loan predators wouldn't do any good. Now, Senator Phillip Puckett (D-Russell Co.), one of the key supporters of that compromise legislation, says:

"They [payday lenders] are circumventing what we tried to do. That sends the wrong message, not a very good-faith effort on their part - and I'm one of the guys that fought for them."

To dodge the regulations that they "agreed" to, payday lenders have created a new product called an open-ended line of credit which has no limits on interest rates or administrative fees. Interest rates can top 300% a year and the fees can be oppressive. Of course, you have to be a wily and wise consumer to spot all this in the fine print.

The bastard cousins of payday lenders are the car title lenders. Virtually unregulated under Virginia law, car title lenders entice people with ads showing them buying new clothes or taking a vacation... just bring in your car title (and a set of keys for the day we repossess your wheels) and walk out with a fist full of green! Car title lenders charge interest of 25-30% per month. If the borrower pays only the minimum he gets to keep the car, but his debt can double in six months. Fail to pay the minimum and you'll be walking.

Senator Puckett was shortsighted and too trusting of the wolves last year, but has now seen the light and wants the General Assembly to take action. Senator Mark Herring (D-Leesburg) introduced SB 1490 that would cap car title lenders and anyone making loans under the opened-ended credit laws to a 36% APR. It is in the Commerce and Labor Committee. More info.

But, just a year after the payday loan battles ended with a wimpy law, and in a session where the budget is sucking all the media and legislators' attention, there may not be much will to act. Terry Kilgore (R-Scott Co.), chair of the House Commerce and Labor Committee which handles such bills, was noncommittal. Senate Majority Leader Richard Saslaw (D-Fairfax), who is cozy with payday lenders, has introduced a bill providing more cover for the industry. He would prohibit a company from offering both payday and open-ended laws - so his buddies will just offer the usurious open-ended ones.

Not taking any chances, the industry has lavished cash on legislators. According to the Virginia Public Access Project, Loan Max, the biggest of the title loan lenders, has donated $530,000 since 2002, about equally split between the parties. The three biggest payday lenders have ponied up $370,700 over the same period.

Hey Richmond! We'll be saying "I told you so" again in 2010 if you shirk your duty this year. We may talk to members of the House of Delegates in November! Do the right thing - put a cap of 36% and reasonable limits on fees (better yet, require they be computed as part of the APR). SB 1490 seems like a good place to start.

Greed Is Good

In Wall Street, Michael Douglas electrifies viewers with his passionate defense of greed.

While self-interest drives all us, the past year has amply demonstrated how excessive greed, unregulated greed, immoral greed can bring down not only a nation's, but the entire global economy.

As the new Obama administration moves to replace blind laissez-faire with reasonable regulations of banking, securities, mortgages, Wall Street, etc., it is time for the Commonwealth of Virginia to attack those purveyors of greed still among us - the payday lenders, the car title lenders, and others who similarly prey on those who are desperate or poorly informed about prudent borrowing.

Last year the General Assembly "regulated" payday lenders with toothless legislation such as limiting loans to $500 and having one loan at a time. Already these predators are bypassing those ineffectual laws by offering open-ended loans that are virtually unregulated and can have interest rates of over 450%. Payday lenders also worked hard to water down truth-in-lending requirements - no sense in telling unsuspecting borrowers about the bottomless pit. 

I doubt the payday lending industry will bring an entire economy to its knees in the same way the self-indulgent fools in the mortgage industry did, but there can be no doubt that payday lenders have no moral barometer when it comes to wrecking an individual's personal economy.

Since the payday loan industry is obviously based on excessive and immoral greed, and it cannot and will not regulate itself, now is time for the General Assembly to act. A basic consumer protection demands the state put a 36% cap on interest that may be charged. That is the same rate cap the state has for other types of small loans. It is reasonable. It protects the vulnerable. It is good policy.

Who should the General Assembly protect? The greed merchants or the people?

Virtual Corn

A bag of mixed maize today:

Scratch and Sniff   A Richmond judge has ruled that Scott Hoover, a W&L professor, is a "virtual representative" for all Virginians who purchased scratch-off lottery tickets. Hoover applied lessons from his course in business statistics to determine that prizes were seemingly being awarded at a slower pace than the laws of statistics would dictate. He then discovered that the Virginia Lottery was promoting and selling tickets although some of the top prizes had already been awarded. His suit alleges that over a five year period the lottery sold over 26 million tickets for which the big prizes were no longer available. That netted the Virginia Lottery $85 million.

Egg All Over His Face   Cobalt6 has smacked down Rick Howell for his back stabbing commentary in the Roanoke Times. Cliff adroitly rebutted every point the self-appointed howler and wannabe pundit made... or didn't make.

Follow the Corn   Do you know which legislators received donations from beverage distributors? How much did the payday lending parasites donate to your delegate to keep the regulators off their backs? Did your senator go to a Redskins game, big hunt, or theme park on the tab of Dominion Resources or Appalachian Power?

The Virginia Public Access Project has added information about lobbyists' donations and activities designed to win the hearts and minds... err votes... of those who represent us in the General Assembly and executive branch. VPAP's website is easy to navigate and, for the first time, includes lobbyists' spending for a 12 month period ending with April 30.

David Poole, VPAP's executive director said, "VPAP's mission is to take public information that's impenetrable and make it understandable, or at least publicly accessible. It became a natural next step to put these disclosure reports on the site."

Payday lenders? Well, they spent more than any other group, $4 million. Must be nice profits in those $500 loans! The folks at Dominion Resources love their sports so it probably isn't too shocking that they spent thousands on NASCAR and Redskins tickets.

There's more at the Roanoke Times.