Monday, April 07, 2008
Editorial: Payday lending awaits its day of reckoning
The change in Virginia law hasn't dampened reformers' fervor.
Critics of Virginia's tepid payday lending reforms are hoping Gov. Tim Kaine will propose toughening the bill the General Assembly has sent him before signing it into law.
Not likely. The Senate refused to pass any reform at all without Kaine's promise he wouldn't make wholesale changes in amending whatever compromise bill lawmakers sent to his desk.
Adversaries of this predatory industry haven't given up the fight, though. Nor should they.
Last week, the AARP, Virginia Interfaith Center for Public Policy, Virginia Poverty Law Center and Virginia Organizing Project held a joint news conference that put lawmakers, the industry and their lobbyists on notice that controversy over the small, instant loans is far from settled.
Advocates for the working poor and vulnerable elderly complained that changes meant to prevent borrowers from getting stuck in a mire of debt are confusing and open to interpretation, and therefore abuse. We trust that no loophole will be too small to allow slick operators to wiggle through.
Also, the initial cost of the loans will be higher, in part because borrowers will be charged a $5 fee to pay for a database to track loans and limit people to one at a time -- and no more than five over six months.
The so-called reform also changes the fee structure, though, a trade-off the industry argued was necessary for it to remain profitable and stay in business. That presumes the state wants it to remain in business. Many, including some lawmakers, do not. But Senate Majority Leader Dick Saslaw does. So it survives.
Kaine is expected to sign the bill this week. The new law wouldn't take effect until January, rather than July, to give the state time to set up the loan database.
So, when the General Assembly meets in 2009, industry friends and foes will have had no time to see what impact this year's legislation actually will have. That likely will ease the pressure on lawmakers to do more.
But not for long, we expect, given the industry's predatory nature.
