from SC Politics Today
The State
February 16, 2010
Lawmakers said Tuesday it may be time consider banning payday lending in the state, or else severely capping the interest rate they charge on loans.
During a mid-day press conference, several senators expressed frustration with payday lenders' efforts to skirt newly-passed regulations, the first placed on the industry since it was legalized in 1998.
"Unfortunately, too many payday lenders see regulation as a game with the point being to skirt whatever rules are in place so they can continue to abuse the most vulnerable citizens of our state," said Sen. Vincent Sheheen, D-Kershaw, who is seeking the Democratic nomination for governor.
About 100 payday lenders in South Carolina have switched their business licenses since last year to become supervised lenders. The switch allows them to extend bigger loans stretched over longer repayment terms.
New legislation under consideration this year is needed to prevent the payday lenders from switching licenses, then continuing to make the same short-term, high-interest loans, the lawmakers said.
"Every time we try to close a loophole, (the industry finds a way around it)," said Sen. David Thomas, R-Greenville, who heads the Senate committee that passed out the new proposal expected to be debated later this week.
"I'm at the point where we may need to ban or cap (the industry) at 99 percent," Thomas said.
Switching licenses is only one of the loopholes the Legislature has uncovered in the law they passed last year.
The new electronic database installed under the new law to register and track outstanding payday loans can only record one loan per person at a time, leaving those with multiple loans devoid of the protections intended by the law, and at the mercy of the lenders who have taken to presenting the checks they hold from borrowers to banks for collection.
The new bill stops those actions, too.
The State
February 16, 2010
Lawmakers said Tuesday it may be time consider banning payday lending in the state, or else severely capping the interest rate they charge on loans.
During a mid-day press conference, several senators expressed frustration with payday lenders' efforts to skirt newly-passed regulations, the first placed on the industry since it was legalized in 1998.
"Unfortunately, too many payday lenders see regulation as a game with the point being to skirt whatever rules are in place so they can continue to abuse the most vulnerable citizens of our state," said Sen. Vincent Sheheen, D-Kershaw, who is seeking the Democratic nomination for governor.
About 100 payday lenders in South Carolina have switched their business licenses since last year to become supervised lenders. The switch allows them to extend bigger loans stretched over longer repayment terms.
New legislation under consideration this year is needed to prevent the payday lenders from switching licenses, then continuing to make the same short-term, high-interest loans, the lawmakers said.
"Every time we try to close a loophole, (the industry finds a way around it)," said Sen. David Thomas, R-Greenville, who heads the Senate committee that passed out the new proposal expected to be debated later this week.
"I'm at the point where we may need to ban or cap (the industry) at 99 percent," Thomas said.
Switching licenses is only one of the loopholes the Legislature has uncovered in the law they passed last year.
The new electronic database installed under the new law to register and track outstanding payday loans can only record one loan per person at a time, leaving those with multiple loans devoid of the protections intended by the law, and at the mercy of the lenders who have taken to presenting the checks they hold from borrowers to banks for collection.
The new bill stops those actions, too.
