Payday lending gets 'some restrictions'
May 22, 2008
The General Assembly passed a payday lending bill Thursday, marking the first regulations placed on the industry since lawmakers allowed it to begin operating in South Carolina 10 years ago.
It took four months to agree on rules for the industry. But at midday Thursday, a breakthrough emerged in the standoff between lawmakers who wanted tough provisions passed to rein in the $155 million payday loan industry and those who favored protecting the industry’s ability to operate.
Near the end of the final day of the 2009 session, Sen. Gerald Malloy, D-Darlington, lifted his objections, offered an amendment and asked the Senate to pass the bill.
The Senate passed the regulations on a 41-4 vote. In less than an hour, the House followed suit, accepting the Senate’s decision, 102-6.
The measure goes to Gov. Mark Sanford for his signature.
“It was with great trepidation that I proposed that amendment,” Malloy said. “The question I had to ask myself is, are the people I am trying to protect better off with getting some restrictions or none at all.”
Malloy said it would have been “painful” to leave Columbia knowing the Legislature had an opportunity to put restrictions on the payday loan industry but failed to do so.
“I’d say it’s a pretty significant improvement over where we are today,” declared Sen. Joel Lourie, D-Richland, who also was holding out for stronger regulations.
“I really believe both sides wanted a bill passed, and in the end, we felt it was not worth losing that and letting the industry go another whole year with citizens unprotected.”
The proposed new regulations capture many of the features in most of the payday lending bills proposed in both the Senate and House:
• Borrowers will be able to take out only one loan at a time.
• A database will be established to keep track of outstanding loans.
• A one-day waiting period would be in effect between each loan up to the eighth loan in a year, then a two-day waiting period is required between loans for the remainder of the year.
The Malloy amendment offers some new consumer protections. A payday borrower can void his or her loans within 24 hours. And the state Board of Financial Institutions will review the database that will keep track of payday loans. It will make an annual report to the Senate Banking and Insurance Committee and the House Labor, Commerce and Industry Committee.
Lawmakers say that will allow the state to keep tabs on how the payday industry is operating.
Sanford spokesman Joel Sawyer said Thursday the governor had not reviewed the compromise.
Spartanburg-based Advance America, the nation’s largest payday lender, said the General Assembly did the right thing by further regulating the industry, while protecting access to a line of credit consumers need.
“This legislation passed creates one of the toughest payday loan laws in the country,” said Jaime Fulmer, Spartanburg-based Advance America’s spokesman. “It’s a tough law that will cause some stores to close their doors.”
Consumer advocates, who say they have been fighting the payday loan industry “with one arm tied behind their backs” — referring to the $300,000 the industry spent on lobbyists and campaign contributions last year — relented Thursday as the deal was going down.
“We are not going to fight this bill anymore,” said Teresa Arnold, lobbyist for AARP in South Carolina.
“Senator Wes Hayes, Senator Malloy, Senator Lourie, and Senator (Robert) Ford, are outstanding examples of legislators who care about consumers, and AARP will let all 500,000 of its members know what kind of fight they put up.”
Source: thestate.com