The General Assembly is currently considering consumer reform legislation involving payday loans, a service many South Carolinians use to help cope with personal financial difficulties. If consumers encounter an emergency expenditure, a payday loan is sometimes their only option. Banks and credit unions generally do not offer these kinds of low-dollar, short-term loans, especially to those who have weak credit histories.

The reform bill is sponsored by Speaker Bobby Harrell, R-Charleston, and co-sponsored by 74 other House members. It sets up a tight set of rules under which payday lenders must operate, including: limiting consumers to one loan at a time, enforced by a new statewide database; restricting the amount a consumer can borrow at a given time by setting a loan cap; offering an extended payment plan, with no additional fees, for consumers who need more time repaying a loan; and instituting stricter licensing requirements for Internet lenders.

Plain. Simple. Effective.

Critical resources, including the time and attention of S.C. lawmakers, should be focused first and foremost on rebuilding our economy, mitigating the rising unemployment rate and diminishing the level of poverty in the state.

Banning payday lending — or even pursuing an effective ban through the imposition of a 36 percent annual percentage rate (APR) cap on payday lending fees — will not alleviate these problems. Poverty and financial instability — especially among African-Americans — is not a result of the payday lending industry; it is a result of an extensive list of statewide deficiencies including health disparities, a lack of employment opportunities, crime and poor public school performance.

Opponents of the payday advance industry tend to paint all borrowers with the same broad brush — emphasizing anecdotal stories describing payday lending customers as poor, uneducated (and often minorities) in cycles of debt. In reality, the industry’s national data show the average payday loan customer has an annual income of $41,000 and has some college education. Furthermore, among households within a one-mile radius of a payday advance store, 63 percent of the households’ occupants are white, and 50 percent own their own homes.

Assemblyman Mitchell is more in touch with his constituents than the so-called “consumer” groups that think they know what’s best for everyone.

The bills would raise the limit of a payday loan from $300 to $600, but it would limit consumers to carrying only one such loan at a time. It would establish a database to track payday loans and require lenders to check it to verify that a customer is eligible for a loan.

The legislation would put an appropriate curb on payday lending. Recent economic history has shown that such reasonable regulation, particularly of credit markets, can be necessary. But the bill is not an overreaction to the business.

We’re all for “reasonable.”

In an effort to continue serving customers in Ohio, Advance America has obtained small-loan licenses from the Department of Commerce for its 244 centers in Ohio. The company intends to offer a small loan product, under the Ohio Small Loan Act, at interest rates below the state’s usury cap, and check cashing and other services in compliance with applicable law in all Ohio centers.

“Our hope is to continue operating in Ohio,” Fulmer said. “We don’t want to lay off anyone, especially with the holidays coming up. But we will determine later if it’s an economically viable way for us to continue operating.”