Group shifts its position from "reform" after change to regulation bill
Tuesday, May 13, 2008
The AARP, other consumer groups and some lawmakers are calling on a House subcommittee to take action on a bill to regulate the payday lending industry. The full Senate has passed the bill, but it's been in a House subcommittee for several weeks.
The subcommittee deleted one of the key provisions of the bill aimed at protecting consumers. It raised the limit on a loan a consumer can get to $600, which is the current limit. The Senate plan restricted the loan to no more than 25 percent of the borrower's income during the loan period.
The change to the bill prompted AARP to change its position from supporting reform of the industry to now calling for a total ban on payday lending.
"Every time we think the payday lenders have agreed to a compromise, they manage to get out of it," says AARP legislative director Teresa Arnold. "From our perspective, there is no ability to come to a compromise with the payday lending industry, so we're just...AARP is saying just ban the industry."
Georgia and North Carolina have already banned the industry. But payday lenders argue that they offer an important service that many consumers need.
Jamie Fulmer, spokesman for payday lender Advance America, says, "A ban would deny thousands of hard-working South Carolinians a viable choice in getting short-term loans." The industry also argues that it charges less than banks' bounced check charges or overdraft protection.
Lawmakers who support the bill to regulate the industry are critical of Rep. Nikki Haley, R-Lexington, chair of the House subcommittee that's been working on the bill for weeks. She says the subcommittee has been working hard on the bill and is committed to passing it out at its meeting next week.
"I don't think a ban is an option until you give choices for these people that have no place to go," she says. "You know, the one thing we've done is gone to the banks and said, 'Will you give these people a $300 loan?' No one will do it. Our job as government is not to take those choices away. Our job is to educate people so they can be more responsible with the choices they have."
But Clementine Mobley and her sister Sally would like to ban the industry that they say took advantage of their mother, Emma Lee Bouknight, who'll be 80 next week. Mrs. Bouknight had gotten behind on bills and a friend told her there was someplace she could go for help--a payday lender. She ended up owing money to six different lenders as she took out new loans to pay off previous ones.
The bill to regulate the industry would allow someone to have only one outstanding loan at a time and would create a statewide database of loans to enforce that.
"It hurt me to see her that way," Clementine says of her mother. "My mom lost weight. My mom was under a lot of stress."
Sally adds, "This payday lending thing should be banned completely." She thinks older people like her mother are targets.
The bill is running out of time to pass. If the subcommittee passes it next week, there would be at most three weeks for the full committee to pass it to the full House, the House to pass it, and then the House and Senate to reach an agreement on a final version of the bill.
Source: http://www.wspa.com |
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