My legislative agenda: Payday lending

I mentioned in an earlier post that I was going to roll out my legislative agenda. This is the second in the series.

Payday lending is another issue that has been the topic of discussion throughout the country. The following video could have just as easily been made in Virginia.

From a Virginian Pilot editorial:

Payday companies loaned out $1.3 billion last year, up from $655 million in 2003, the year after they received permission to charge more than 36 percent interest. More than 433,500 people obtained a short-term, high-interest loan in 2006, with nearly 97,000, or nearly one in four, taking out 13 or more loans.

Payday lenders filed lawsuits against 12,500 borrowers last year, more than double the number reported in 2003.

Targeting the working poor, payday lenders have mushroomed in Virginia since the law first allowed them. Exemption from the 36% interest rate cap has made this business extremely profitable. Have you seen the TV ads they have been running lately? They make payday lending sound like a good thing. In the background, they are making significant contributions to legislators and joining local business groups, who are then less likely to take a stand against predatory lending.

HB12 and SB24 have been introduced which will cap interest rates at 36%. SB25 has been introduced to repeal the 2002 statute. The law prohibiting loans above that rate to military members went in effect in October. From the same editorial:

In September, the City Council of Washington, D.C., voted to cap payday loans at a 24 percent annual interest rate. Many of those companies are expected to flee across the state line into Virginia, where state laws allow interest rates of nearly 400 percent.

North Carolina banned predatory lending last year, while Maryland and West Virginia have never granted state approval for payday companies.

It is time for Virginia to step up and end this practice.

Technorati Tags: Payday lending