Payback for payday lenders?

Out of view, there was a reunion of sorts in the General Assembly Building the other day. Lobbyists for payday lenders sat down to ponder a problem of the industry's own making: a furor that is turning the lenders' best friends in the legislature into their worst enemies.

High-cost, instant-loan companies enraged the wrong people by seemingly worming around a clampdown fashioned last year that could have been tougher were it not for Tom, Dick and Kenny. That would be Senators Norment, Saslaw and Stolle.

Even before restrictions took effect Jan. 1, 617 of the 832 cash parlors across Virginia got the OK from the State Corporation Commission to offer open-ended loans with eye-popping fees. Put another way: loans more profitable -- more exploitive, foes say -- than payday loans.

Why are the lenders doing this? Because they can. SCC approval is no more than a ministerial exercise, requiring that lenders complete an application. The commission set some restrictions on the new loans: a maximum of $750 and annual interest rate of about 360 percent.

Why are the lenders doing this now? Because the bottom line demands it. Shares in most of the publicly traded lenders are being hammered.

The giant lines of credit they get from banks -- payday lenders' payday lenders, if you will -- are costlier and harder to get.

But the industry's tone-deafnesses is bewildering. Maybe it's sheer cheek. One would have thought lenders would have waited until after the legislature quit on Feb. 28, attracting less attention and making it more difficult for lawmakers to respond.

Besides, the politicians have bigger worries, including the November elections to decide the governorship and whether Republicans hold the House. The lenders have ensured that friendly, even ambivalent delegates take a firmer line, lest their inattentiveness on an overarching issue -- what's in voters' wallets or not -- becomes campaign fodder.

Money-store operators may be down, but they're not out. They have many options at their disposal. Among them: promoting a House-Senate impasse, guaranteeing business as usual. Car-title lenders could join the fight if they conclude that a catch-all for payday lenders could also catch the repo man.

And the lenders could dump their payday-loan licenses to focus on open-ended loans. It's evasion by reinvention.

Since opening Virginia to lenders in 2002, the legislature has learned that controlling them is like trying to pick up a wet watermelon seed.

And it goes without saying the industry is losing something already in short supply: credibility. Lenders could be reminded of that tomorrow, when the Saslaw-led Senate Commerce and Labor Committee is expected to vote out his bill to prevent their perceived end-run.

Saslaw's snit -- he personally dressed down two of the lenders' top lobbyists, Reggie Jones and Carol Stewart, after apparently deciding he'd been snookered -- has important symbolism. It means an industry that ruled for almost seven years, with Saslaw's consent, is reduced to damage control.

Because Virginia -- where the business of government is business -- wasn't supposed to be for payday lenders what Ohio, Arizona, New Hampshire and Arkansas have become: hostile territory.

Contact Jeff E. Schapiro at (804) 6496814 or . Watch his video column Thursdays on inRich.com. Listen to his analysis Fridays at 8:33 a.m. on WCVE radio (88.9 FM).