Tuesday update (02/05): Payday lending

Weekly update of my legislative agenda issue.

Big news on the payday lending issue came yesterday. At a morning press conference, it was announced that legislators had reached a compromise on this. (Not just GOP legislators, Brian.)

Key legislators from both parties in the House of Delegates have signed onto a compromise to regulate payday lenders that is intended to prevent unwary consumers from getting trapped into debt.

Newport News Republican Glen Oder will carry the bill, a revised version of his HB12, which will be heard by the House Commerce and Labor committee Tuesday. Key components of the bill:

• No more than 5 loans per year
• No more than one loan outstanding at a time
• A 24-hour cooling off period between loans
• Longer repayment term
• Lenders can charge 10% of the loan amount plus $5 verification fee, with interest capped at 36%
• Can only borrow up to $500

There will be a database to track these loans, something that has been the subject of many of the bills on payday lending this year. No word on how the database will be paid for. Several of the earlier bills charged the borrower a fee for this.

The Legislative Black Caucus made payday lending one of it legislative priorities and was also present at the press conference. While this bill isn’t perfect, it is a step in the right direction.

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