Gubernatorial hopeful McAuliffe calls for a payday-lending ban; other Democrats follow suit.
Published: April 3, 2009
Terry McAuliffe is starting a pile-on by Democratic gubernatorial candidates of the high-interest instant-loan industry, proposing the state kick out payday lenders.
"We need to shut them all down; they only shove people into worse economic conditions," McAuliffe said yesterday.
McAuliffe's two foes in the June 9 primary echoed his proposal, though both Sen. R. Creigh Deeds of Bath County and former Del. Brian J. Moran of Alexandria voted in 2002 to open Virginia to payday lenders.
"They prey on the people in the weakest financial condition and put them in an even worse position," said McAuliffe, a McLean resident and former chairman of the Democratic National Committee.
The proposed ban on payday, car-title and open-ended loans, all of which carry triple-digit interest rates, is included in McAuliffe's latest economic package.
Focusing this time on ways to guard an individual's finances, McAuliffe also urged protecting home ownership; making it easier for low-income Virginians to plan for retirement and helping college graduates pay off their loans.
Through press secretary Brooke Borkenhagen, Deeds signaled his support for closing the state to cash stores and related lenders.
"When Terry was doing his out-of-state fundraisers, Creigh was in the Senate, working on this issue," Borkenhagen said.
Jesse Ferguson, Moran's spokesman, said: "Brian has been, and continues to be, an opponent of the payday-lending industry."
And while Moran's "Homeowners' Bill of Rights" includes a ban on predatory and deceptive lending, he has accepted about $25,000 in contributions from payday and car-title lenders and check-cashing companies, according to the Virginia Public Access Project.
Rather than tougher limits on what lenders can charge -- for example, the industry says a 36 percent cap could drive it out of business -- McAuliffe wants Virginia to join about a dozen states and prohibit the lenders altogether.
In Virginia, payday lenders have spent millions of dollars on lobbying, political contributions and advertising to stop or slow additional restrictions.
The 2009 General Assembly blocked an end run by lenders on a clampdown enacted the previous year. About three-quarters of the state's 800 cash stores used a loophole in state law to offer higher-interest open-ended loans.
McAuliffe said he would crack down on financing practices that generate additional profits for mortgage companies at the expense of homeowners, such as penalties for early payments.
McAuliffe also said recent college graduates should be able to erase some of their loans through a service program that, among other things, steers teachers into areas where they are badly needed.
Contact Jeff E. Schapiro at (804) 649-6814 or
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Reader Reactions
How about a symbolic gesture that justice will be served in this mortgage crisis? I am beginning to think the banks will get away with bringing down the world economy. They’re all over the payday lenders while the AIGs are put on welfare. You know the payday loan issue is insignificant when you have a bipartisan love-in like this.
We live in the political age of weapons of mass distraction. There is the news, and then there’s what’s really going on. Here, the news is gubernatorial hopefuls make overtures against payday lenders. The reality is, they will do nothing about the real predatory lenders that sold overpriced homes to under-qualified people. Flagrant fraud which has bankrupted the world economy goes unchecked, yet let’s reign in a lawful industry that makes tiny loans… “Vote for me. Look! A deer!“
Federal Reserve Bank of New York researchers concluded that the elimination of payday loans results in increased credit problems for consumers, such as more bounced checks, complaints about lenders and debt collectors and increased filings for Chapter 7 bankruptcy. This proves that the elimination of payday lending does not eliminate the need for short-term, low-dollar credit.
This kind of political opportunism is reprehensible. Democrats should use their control of the House for more than just petty partisan grudge-fighting, and the candidates shouldn’t just be dogpiling on the easy scapegoat. They should exercise a little more care when they’re playing with people’s livelihoods.
McAuliffe proves more and more every day what an absolute blithering idiot he is.
I have never seen someone from a payday lending store “preying” on anyone! And if anyone ever has seen a person from one of these stores hold guns to people’s heads and force them to go into the store and take out a loan, I’d like them to present proof of that action. I’d like to see any proof that a representative of a payday lending store has EVER made a loan that the customer—no matter how poor or rich the customer is—doesn’t want.
These stores offer lower-income people an option in finance that they cannot get anywhere else. No bank will do what these stores do. That means no lower-income person has access to loaned money without payday lending stores. Do the stores charge more? Yes, because a lower-income customer is a bigger risk. Does every customer get charged 365% interest? Of course not. That’s just the liberal media lies. Should lower-income people be taking out these loans? That’s for them to decide, but if the service isn’t offered they cannot take the personal responsibility of deciding for themselves. Isn’t that something McAuliffe’s good friend Barry Obama said he wanted—more personal responsibility out of the black community? I recall hearing that during the campaign.
You take away these stores and you tell lower-income people they aren’t important enough to receive loans. But of course, we know liberals like McAuliffe want to control poor people’s lives as much as they can, which is why he wants these stores banned. McAuliffe thinks he can better make a decision about whether a lower-income person should take out a payday loan than the person can. Typical liberal.
If payday loans are so bad (and I think they are), then why hasn’t a Democratic governor done something about it before now? They’ve had 8 years.
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