Posted on 12/30/2007 2:36:27 PM PST by VRWCtaz
Hawkins seeks ban on payday lenders By Robert W. Dalton Published: Sunday, December 30, 2007
State Sen. John Hawkins is abandoning his efforts to impose stronger regulations on payday lenders.
Instead, Hawkins wants to outlaw the industry in South Carolina.
"They're making far too much money to accept any meaningful regulations," said Hawkins, R-Spartanburg. "I've come to realize they are similar to video poker in that regard, and they've used every trick in the book to fight real regulations."
Hawkins - one of several attorneys who have filed suit against payday lenders claiming they knowingly make loans to people who lack the ability to repay them - said he will introduce legislation in January aimed at phasing out the industry.
Jamie Fulmer, director of investor relations for Spartanburg-based Advance America Cash Advance Centers, said the dual roles that Hawkins and the other attorneys are playing create an "interesting dilemma."
"When you are seeking to ban an industry as a legislator and have a pending lawsuit against companies that are operating lawfully, I just don't know how to draw that line," Fulmer said.
"It puts our company in an awkward position, and it puts the people of South Carolina in an awkward position."
Hawkins, however, said there is no conflict. He said his duties as a lawmaker and his duties representing his client are totally separate.
"I'm not going to set aside my Senate role just because I'm involved in a lawsuit brought by people who have been harmed by these companies," Hawkins said. "I'm comfortable with my actions. Are they comfortable getting rich off the backs of the working poor?"
Does industry help or hurt?
Payday lenders provide short-term loans, usually for two weeks, and usually charge $15 for every $100 borrowed. The maximum loan is $300, so the payback is $345.
Industry critics say the annualized interest rate, nearly 400 percent, is too high a price to pay, and that too many people get trapped in a cycle of borrowing more to pay off previous loans.
Supporters say the industry provides emergency cash for people who would have trouble getting it elsewhere. They point out that bounced check fees, if annualized, would be nearly 1,000 percent.
Sen. Robert Ford, D-Charleston, introduced a bill last session to ban payday loans. Hawkins worked out a compromise bill that would have required lenders to enter the names of customers into a database to ensure that a person didn't take out multiple loans, raised the maximum loan to $400 while capping the number of loans a customer could receive at five per year, and implemented a seven-day cooling-off period between paying off one loan and receiving another.
Hawkins said he abandoned that strategy, however, because of industry resistance and because he feared Gov. Mark Sanford would veto the bill.
"You've got a governor who has climbed on board with the payday lenders using free-market reforms as his reasoning," Hawkins said. "I'm certain he would veto a bill imposing more regulations based on that ideological basis."
Sanford spokesman Joel Sawyer said Sanford would give fair consideration to any bill that crosses his desk. But he said Sanford favors giving consumers information over placing additional restrictions on lenders.
Fulmer said industry representatives tried working with lawmakers to implement "reasonable" regulations that benefited the companies and protected customers who might misuse the service. Banning the industry would not be in the best interest of people who needed short-term loans and had nowhere else to turn, he said.
"If you eliminate the product, you aren't eliminating the need for the product," Fulmer said. "That does nothing to solve the problem."
Issue hits close to home
Rep. Harold Mitchell, D-Spartanburg, and Sen. Glenn Reese, D-Boiling Springs, represent the area in which Advance America is headquartered. They say it's unfair to go after payday lenders without taking a look at the fees charged by banks, credit card companies and title loan companies.
"It's obvious there are problems across the board," Mitchell said. "I'm not going to single out companies like Advance America and give a pass to these other institutions."
Reese said he plans to introduce a compromise bill centered on the Community Financial Services Association of America's "best practices" guidelines. Such legislation, he said, would eliminate the potential for abuse.
"The center of the payday lending world is in my district," Reese said. "I'm going to do my best to get everybody to the table and get a bill that includes the best practices so the industry survives and remains viable, and works for the people who need it."
Translation: I’m not getting my kickback!
Payday lenders are scum, but the upside is that they take the small-loan business away from the mob.
I have never used one, and it seems to me that I would be paying more for a payday loan than I would for any late fee for any bill that I would use the payday money for. I would like to see a large sample of people who use these loans, why they use them, and what alternatives they have.
1. Require clear disclosure adequate to explain the terms to any competent borrower.
2. If they’re not competent to understand this, they’re not competent to vote.
I’d let you know my views, but it wouldn’t help, since they’re the same as yours. ;)
On a related note are the check cashing services, that charge rates of 10% or more. If one has reason not to open a bank, credit union, or S&L account, then I guess it is just the price they have to pay...same as for those who want the money NOW, instead of waiting for their tax refunds to arrive.
Fools and money; even Solomon had things to say about them 3,000 years ago. Still true today, the only difference being a greater number of fools in the world.
Hi, I’m stupid. Please, Mr. Government, protect me from myself!
Sounds like some mortgage companies I've heard of. Oh, you can afford it now, don't worry. Please don't notice the increased rates and balloon payment around the corner.
I don't see that. As long as they have full disclosure and adhere to all regulations, it's no more of a "scummy" operation than say, a state run lottery.
You just can’t legislate stupid out of people.
I had to help someone get out of the cycle so I’m biased but I don’t think the government has any “interest” here which is probably what this is all about.
The military has a much more powerful weapon. Any post commander can declare all pay day loan companies off-limits. It's as simple as that. Soldiers with problems can be referred to Army Community Services, which can not only give emergency loans, but also counsel the soldiers in financial management.
Hey, I just described the US Congress; maybe we should ban that too.
Who puts a gun to people’s heads and forces them to use these payday lenders?
What has happened to the Republican party?
People with an IQ less than 90
why they use them,
To purchase things they don't need (alcohol, lottery tickets, etc.)
and what alternatives they have.
Thievery
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