From the Richmond Times Dispatch:

Recession and additional regulation have shrunk the ranks of cash parlors in Virginia more than 19 percent since December. There now are 630 payday-lending outlets — down from 786, according to the State Corporation Commission.

Leading the exodus is Check ‘n Go of Mason, Ohio, which is closing its 68 Virginia outlets. It is among five instant lenders surrendering their payday licenses to Virginia regulators.

“We’re fighting to survive,” said W. Allen Jones, founder and chairman of another major lender, Check Into Cash of Cleveland, Tenn., the nation’s largest privately owned payday lender.

“People will not overspend; they’re not confident in their jobs.”

But rather than leave the state, Check Into Cash is closing 19 of 64 stores — idling about 60 workers — and shifting to pricier, lightly regulated open-ended loans. This could buttress annual profits that, when the company was offering only payday loans, had fallen to about $10,000 per store from $15,000 in 2004.

Legislators always think payday lenders are bluffing when they say jobs will be lost, stores will close if onerous restrictions are imposed.  Well, what do they think now?

The Virginia Daily Press is in a tizzy because payday lenders are innovating and changing their service to make sure they can stay in business:

For example, in September payday lenders received permission from the State Corporation Commission to offer open-end loans at their payday loan locations. Open-end loans are loans with no set time of repayment. The borrower is only required to make a periodic minimum payment, and the loan can continue in perpetuity. The biggest payday lender in Virginia started doing open-end loans on Dec. 1, charging an interest rate of 365 percent if the borrower allows the lender to automatically deduct payments from his account and 456 percent if he doesn’t.

So they got permission from government regulators to change their service. How brazen?  

The critics have things exactly backwards.  During this period when credit will remain tight, payday lenders are a valuable source of credit for working people.

Lots of stories like this one over the last two days:

The new law limits borrowers to one loan at a time and extends the time they have to repay it. It also creates a database to track who’s borrowing, how much they borrow, and when.

“It was really one of the more high-profile issues during the past several sessions of the General Assembly,” said State Senator Mark Obenshain.

However, lenders are already trying to get around the new law by offering open-end credit products. Those are an unregulated type of loan, that allows lenders to charge whatever they want as long as they don’t charge anything for the first 25 days.

From the article:

Jamie Fulmer, spokesman for the nation’s largest payday lender, Advance America, said unregulated, open-end loans are necessary to keep fastcash stores profitable and to meet the needs of some borrowers.

“In these times, when credit is more difficult, we need to provide as many options as possible,” Fulmer said.

“It sees to me such an obvious slap in the face of legislators,” James W. “Jay” Speer of the Virginia Poverty Law Center said of the industry’s latest loan products.

Lenders got the okay from the State Corporation Commission.  How is that a slap in the face to anyone?

Not happy with nanny-state restrictions on payday loans, activists in Virginia are going after title lenders.  From the story:

Because car title lenders are unregulated, no one knows exactly how many exist in Virginia. Religious and consumer protection groups have identified 113 through Google and online Yellow Pages searches.

Like payday lenders, title lenders offer small loans with high interest rates of 25 to 30 percent per month. Borrowers turn over the title to their vehicle and a set of keys as collateral on the loan. If they pay only the minimum amount each month, the interest accrued can reach double the original amount of the loan within six to eight months. If borrowers fall behind on payments, they can lose their car or truck.

People need credit more than ever.  Theses activists are making things worse for working people, not better.

This is over the top.  In the Virginia Daily Press today,  a guest writer invokes one of the greatest men who ever lived, William Wilberforce (see the movie “Amazing Grace” to learn more), in his screed against payday lenders: 

This commission can act with the boldness of William Wilberforce, the 19th century reformer who, against the powerful opposition of well-heeled commercial interests, led the effort for one of the greatest social reforms known to man, the abolition of the slave trade.

Well the Payday Pundit can be more pompous than some “consumer” advocate.  To paraphrase another great Enlishman,  payday lenders shall go on to the end…we shall fight on the beaches of Virginia, we shall fight on the landing grounds of the state capitol in Ohio, we shall fight in the fields and in the streets of California, we shall fight in the hills of Colorado, we shall never surrender.

…So said David Clarke of Virginians against Payday Loans today while speaking at the national conference on debt culture. Discussing the debate over payday lending in Virginia, Clarke stated, “The printed press- the earned media- they were clearly with us.” 

While the Payday Pundit recognizes this was, in fact, the case, she is speechless.