From an article this evening:

Now, Harrell, R-Charleston, and Cato, a Travelers Rest Republican, are the top sponsors of a bill that would limit consumers to taking out no more than one payday loan at a time for up to $600 dollars and force lenders to check a state database before granting loans. Lender fees would be used to set up and operate the database, which would instantly report when loans are made.

Ultimately, a strong regulatory scheme will provide  payday lenders the certainty they need to run their businesses.   Whether the South Carolina bill provides that remains to be seen.   We’ll watch for the comments of the lenders that do business in South Carolina and post them here.

That would be McDonald’s.  

The League of Women Voters hosted a balanced debate about payday lending and a 36 percent APR cap in Iowa.  You can read the entire story here, but there is one qupte from payday lending opponent Victor Elias that demonstrates the paternalistic attitude that industry critics constantly display:

Elias addressed what would happen if payday loans were limited to 36 percent APR.

“What would people do for credit in that circumstance? They would forego unnecessary expenditures, they’d borrow from family members or perhaps they wouldn’t pay for cable TV for a month. One-third of the people in the country don’t have access to payday loans because they’re illegal in the state they live in. This payday debt trap should not be going on in this state either,” said Elias.

Why do payday opponents always believe they know how best to budget other people’s money?

Robert Feinman over at Talking Points Memo seems to have a little crush on a CFSA spokesperson, which I guess means that he doesn’t have to make any real argument or address the content of what she says. Robert quips:

I wonder how she lives with herself? Did she plan on becoming a spokesperson for loan sharks when she was growing up?

Well Robert, it helps that she represents a well regulated industry that provides an important and relatively inexpensive form of credit to hard working families that encounter an unexpected expense between paydays.

Now Robert, having answered your question, any chance you could, in turn, explain to The Pundit how a payday lender that clearly displays its fees and terms becomes deceptive in your opinion?

Bank of America has settled a class action lawsuit totaling $35 million for predatory overdraft policies between 2000 and 2007.  If you were a customer at that time, you can claim your $78 here.  Unfortunately that comes no where near the $368 per year the average household pays in overdraft fees.  For those doing the math at home, that means if you were a Bank of America customer for the entire 7 year period of the class, you likely paid them an average of $2,576 and they’re kindly throwing $78 (or about 3%) of your money back at you.

Rep. Sherry Appleton has introduced a rate cap bill.  We’ll keep readers posted on any developments, but it’s interesting that she is already threatening a ballot initiative if her bill doesn’t pass. 

This falls into the category of “bad public relations.”

Rate caps are bad. The government has no business telling independent merchants and service providers how much they can charge for anything. Even some CFSA members charge $25 per hundred in states like Utah, whereas some Internet lenders – many of whom are not offshore but simply operate on the “one-state model” (whereby they advise the consumer that the transaction is governed by the state where they are licensed as if the consumer had come to their office) – charge less.

Internet lending is good for the consumer. It offers convenience, privacy, and because much of the process is automated and overhead costs are less, the product can be offered more cheaply (although I understand the default rate is considerably higher due to scam artists and such). Discriminating consumers can find Internet lenders who charge less than $15 per hundred. Consumer activists should simply steer people to the least expensive companies, which would speed up the balancing of the free market.

But yes, the Federal government should ban state interest rate caps so that payday loans, installment payday loans, and other useful loan products can be offered in all 50 states.

They’re still writing about the impact of the 36% cap in Ohio: 

Jennifer Kindel, market manager for Cashland offices in Northeast Ohio, said they’ve closed 40 locations because of the legislation, but she didn’t give a specific number of layoffs.

Kindel said the company provided the loans for periods between 14 and 30 days, charging a flat $15 fee for every $100, not charging 391 percent interest as was the claim. The higher interest figure came from multiplying the flat fee out over a year’s time, she said.

“We’re talking about a two-week loan. You can’t take the loan out for a year. To attach (an) APR (annual percentage rate) doesn’t make sense,” Ferguson said.

She said more than 90 percent of their customers pay back the loans on time. Those who don’t are offered an extended payment program. Customers can’t take out two loans at Check Into Cash at the same time, she said.

At this risk of being repetitive, the customer’s voice is missing from this story.  What are citizens of Ohio doing to meet their short-term credit needs?

A blurb from a roundup piece in the State Newspaper:

PAYDAY LENDING: Tuesday, the Banking and Consumer Affairs subcommittee will meet in the Blatt Building, Room 403, to take up a bill that would raise the maximum amount of pay-day loans to $600 from $300 and create a database that would prevent consumers from having more than one pay-day loan at a time.