Assembly 2011: Payday Lending Restrictions Fail in Senate
Several bills that would put further restrictions on the payday lending industry have been killed in Senate subcommittees ... and former Governor and Senator George Allen is looking for a rematch with Senator Jim Webb for his old seat. Craig Carper reports.
Legislators on both sides of the aisle have been trying to rein in the payday lending industry for years, though these lenders have a powerful lobbying presence and create jobs. This year, consumer advocates were looking to implement a 36 percent cap on yearly interest on payday and car title loans and open-end credit.
Bruce Elder is a city councilman from Staunton and the author of the original 36 percent cap proposal that has now been adopted by 99 cities and localities around the commonwealth.
Elder: The reforms of 2008 and 2010, while addressing some of the worst abuses of these lenders, failed to address the greatest abuse of all, that of triple-digit interest rates that create a permanent debt trap for those seeking an emergency loan. It is past time to ask our Governor and the General Assembly members, “Just who do you represent? The people of the Commonwealth who have spoken clearly on this issue or the consumer lending lobby?"
Reverend Doug Smith, the Executive Director of the Virginia Interfaith Center for Public Policy, says there is overwhelming public support for the 36 percent cap.
Smith: There’s really three numbers that are key to remember this morning: 36, 71 and 79. We asked people across the state, 'do you support a 36 percent cap on payday and car title lending?' 71 respondents said yes, they would support a change in state law that would lower the maximum interest rate to 36 percent for payday and car title lending. We then followed up with a second question, knowing what the economy is like, knowing how sensitive we are to the issue of jobs, we said, ‘well as a result, what if payday and car title lenders chose to leave the state rather than operating under a 36 percent rate cap?’ 79 percent of the respondents who were calling for a 36 percent rate cap on payday and car title lending said, ‘we would still support a law that put a cap on payday and car title loans at 36 percent, even if it meant that payday and car title lenders moved out of state rather than following what is reasonable regulation.’
All of the Senate's cap bills have now been killed in committee; while counterpart bills remain alive in the House, ultimate passage of those bills in both chambers looks unlikely.
Also yesterday, George Allen officially announced his intention to run for his old U.S. Senate seat.
Political analyst, Dr. Bob Holsworth, says the Republican primary would most likely be particularly tough for Allen.
Holsworth: Jamie Radke, who organized the Tea Party convention, has already announced that she's going to challenge him and it’s possible that someone like Corey Stewart, Chair of the Prince William Board of Supervisors, could also be a challenger. Now Senator Allen would be a clear favorite in that race but the prospect of an 18-month, very bitter Republican primary struggle, is not something that I think many people in the GOP relish.
If Allen was able to run in a rematch against Webb, what I think you’re going to see is a race where George Allen is going to try to capture the kind of anti-Washington sentiment that we have seen emerge so powerfully in 2010.
At the same time what’s very uncertain here is the role that the national environment will play. If this race took place in 2010, Allen vs. Webb rematch, I think Allen would have won it pretty handily, but whether the national climate, the national environment will be the same in 2012 is highly uncertain. We don’t know who the Republican candidate for President is likely to be and I think that is going to have more of an effect on the political environment in Virginia than most people have thought about to date.
Officials at the Democratic Party of Virginia say they are looking forward to a rematch and that they are confident that Senator Webb’s record will earn him another term.
Craig Carper, WCVE News, Capitol Square