Payday Pundit

“We appreciate the effort of the General Assembly and Governor to forge a compromise on a complex issue; the result is one of the most restrictive payday-lending laws in the country. In addition, Governor Kaine deserves  credit for acknowledging that the work of the General Assembly was difficult and that the compromise developed during the legislative process represented a careful balance, which should now be given the chance to work.

“Still, we continue to have concerns about how lenders will be able to operate under this regulatory framework and how consumers will adjust to what is essentially a new credit product. The additional regulations included in this legislation change what consumers tell us they like about payday loans – that they offer a simple, transparent and straight-forward avenue for managing unexpected expenses. Some lenders will no doubt be forced to close as a result of this new law, and others will be significantly impacted.

“We have always maintained that the best consumer safeguards ensure continued availability of payday loans while protecting those who misuse them and other financial products. But we have difficulty with painting all borrowers with the same broad brush; this legislation does that, and unfortunately penalizes responsible borrowers. It does not effectively balance protections from excessive debt and preserving access to credit.

“Our customers recognize that payday loans are often their least-costly option, helping them to avoid unregulated alternatives like off-shore Internet lending operations as well as recurring debt or stiff fees associated with credit cards, bouncing a check or neglecting a bill.

“Opponents of our industry have always been singularly focused on the elimination of this industry through outright repeal or by placing prohibitive restrictions on the product we offer to consumers. Virginians deserve the freedom to make their own financial decisions, choosing credit products that best suit their needs and their families.

– Tommy Moore, Executive Vice President, Community Financial Services Association