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Payday loan limits advance in House Payday lenders launch TV ads to counter efforts to restrict loans to five a year
Saturday, Feb 09, 2008 - 12:09 AM By JEFF E. SCHAPIRO TIMES-DISPATCH STAFF WRITER The House of Delegates yesterday tentatively endorsed restrictions on payday lenders that the high-cost instant-loan industry is attacking in new television ads as unfair to borrowers. The clampdown would limit loans to five per year and one at a time -- a feature proponents say would prevent Virginians from becoming ensnared in debts that balloon to thousands of dollars and can take years to pay. Lenders, to whom the state opened in 2002, say that the limits could cost the jobs of some of the 2,400 people who work in an estimated 800 money stores. Two 30-second television commercials by the Community Financial Services Association, a trade group made up of the nation's biggest payday lenders, warn borrowers: "Don't let lawmakers limit your financial options." The House measure, largely fashioned by Republicans once friendly to lenders and the Democratic Legislative Black Caucus, also restructures pricey fees on the loans. But the legislation generally preserves what lenders -- spending millions of dollars on lobbying, campaign contributions and advertising -- pocket for each cash advance, which is limited to $500. Last year, Virginians borrowed nearly $1.5 billion. Endorsed on a voice vote, House Bill 12 -- by Del. G. Glenn Oder, R-Newport News -- is up for final passage Monday. Supporters are looking for a hefty vote to maintain pressure on the Virginia Senate to buck heavy lobbying by lenders. Senators on Monday are expected to roll out their own reform package. One possible feature: increasing the maximum number of loans to seven, a level that some industry lobbyists say is necessary to keep stores profitable. Oder singled out Senate Majority Leader Richard L. Saslaw, D-Fairfax, as the principal obstacle to reining in the fast-growing payday-loan industry. "He is the piece of sand in the middle of the hourglass," Oder said. Saslaw, who also leads the Senate Commerce and Labor Committee, is an ally of lenders. Last year, he helped save them from sharp limits on interest rates by pulling an industry-favored bill to prevent it from being rewritten by Gov. Timothy M. Kaine to include a cap on fees. Another ally of lenders, Del. R. Lee Ware Jr., R-Powhatan, said the Oder bill wrongly remakes payday loans. Loans typically are repaid within two weeks, but Oder's bill would let them be carried for four weeks. "It's not the right vehicle for payday reform," Ware said.
State
studies have shown some Virginians drawing 13 loans per year, suggesting --
opponents of payday lending say -- that many are becoming mired in debt, using
one cash advance to pay off another.
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Presbytery of the James |