More like these, please. :)

These scumbags are preying on working people and taking advantage of the clusterf*&% that is our current economy.

I wish they would get that cap down more than that. Some Dems have actually written op eds about the importance of payday lenders. Dems I actually like and I was shocked to find out that they support these parasites.

For many Virginians with poor credit ratings, payday loans are their only source of funding in an emergency.  Banks and credit unions won't touch them, even for a mere $500 loan.

If they go to their bank's ATM and it lets them overdraw their checking account (if they have one), they will be subject to a $35 fee for each overdraft, even if the overdraft is for only $1.

That comes on top of the monthly maintenance fee of $5 to $20, the additional fees for using another bank's ATM ($2-3 in fees each to their bank and to the bank where they used the ATM), and all the other fees which are a major profit center for banks.

All the attention is focused on the fees paid by borrowers to take out short term loans from payday advance companies. Why are banks not being subjected to the same scrutiny since their fees can meet or exceed those of payday lenders?  Why not place interest caps on auto loans, mortgages, credit cards, account maintenance fees, and overdraft fees, too?

If someone needs money now to pay for medicine or gas or heat or electricity and they have no credit, they at least have the option of using a payday lender.  Otherwise, they have no where to go.

A reasonable compromise needs to be reached in the Virginia General Assembly.  Establish a database to prevent abuse and limit the number of loans that someone can take out.  Provide for a reduced-fee 60-day "cooling off" period for borrowers who can't pay their loans on time.  But don't kill the payday lending industry or you will eliminate the last resort (and often only) lender for many of our citizens who have no other credit choices available to them.

Let's face it.  All of Virginia is not as wealthy as northern Virginia.  Cap the rate, kill the payday lenders, and you have removed the last and only source of credit for many Virginia families.

I'm not even sure why you would bring that up as it's totally irrelevant.  I refer you to the diary: "DC has a 24% cap and payday lending is illegal in North Carolina, Maryland, and West Virginia."  

Also, here's the deal in Georgia: "Georgia law prohibited payday lending for more than 100 years, but the state was not successful in shutting the industry down until the 2004 legislation made payday lending a felony, allowed for racketeering charges and permitted potentially costly class-action lawsuits."

And here's the deal in New Mexico:

New Mexico will cap fees, restrict total loans by a consumer and prohibit immediate loan rollovers, in which a consumer takes out a new loan to pay off a previous loan, under a new law that takes effect November 1, 2007. A borrower who is unable to repay a loan will automatically be offered a 130-day payment plan, with no fees or interest. Once a loan is repaid, under the new law, the borrower must wait 10 days before obtaining another payday loan. The law will allow the term of a loan to run from 14 to 35 days, with the fees capped at $15.50 for each $100 borrowed. There also will be a 50-cent administrative fee to cover costs of lenders verifying whether a borrower qualifies for the loan, such as determining whether the consumer is still paying off a previous loan. A borrower's cumulative payday loans could not exceed 25 percent of the individual's gross monthly income.

Finally, here are some facts on payday lending which I think people will find interesting:

   * 90 percent of payday lending business is still generated by trapped borrowers with five or more loans, even in states that have attempted reform;
   * 60 percent of payday loans go to borrowers with 12 or more transactions per year;
   * 24 percent of loans go to borrowers with 21 or more transactions per year;
   * One of seven Colorado borrowers have been in payday debt every day of the past six months;
   * Nearly 90 percent of repeat payday loans are made shortly after a previous loan was paid off.

Great stuff, huh?  

All I am saying is that there is a need for such services to those who cannot get credit anywhere else.

More than 400,000 Virginians took out payday loans for $500 or less in 2006.  Where are they going to go to get money for an emergency if you kill the payday lenders in Virginia?

There are no other choices for those with poor or no credit.  If there were, maybe I would be singing a different song.

The New Mexico law referenced by Lowell looks a lot like the compromise being discussed here in Virginia.

Interesting that "The Economist" seems to 1) have just registered on RaisingKaine today, 2) have a pretty detailed set of arguments, and 3) registered on a day when payday lenders have a pretty big orchestrated 'astroturf' presence at the state capitol in Richmond... just sayin'...

If someone ran a traceroute on this IP address, would it come up with a PR firm or law firm?

He makes a good point: if you run these lenders out of business, then where do their customers turn for the money? One of the reasons they end up at these lenders in the first place is because most banks will not bother with their poor credit history. Before we axe these places in a move of good spirit, lets make sure we do not end up with a bigger problem in the end.

Capping interest rates at 36% will not drive all lenders out of business. Merely the predatory ones who have no business being there in the first place. That is just industry bullshit.

If as a lender providing are what are essentially secured loans (the lender keeps a borrower's paycheck as collateral) you can't make money at 36% per year, you are incompetent.

Further, current interest rates often run in excess of 250% and trap people in an unending cycle of debt. Capping interest rates is not a "move of good spirit," but smart, moral and needed  policy that is long overdue.

Frankly, there is not a single convincing argument in favor of not capping rates, other than "The predatory lending industry contributes a lot of money to politicians in our state, and if we cap interest rates, they will stop doing so."

that I have not even taken a position on this thread. I merely backed up a good point which you have still failed to address. When you cap at 36%, we will inevitably run some of these places out of business, and thus deny access to loan to some of the very patrons that these places feed upon. You should stop looking at this as simply pro or anti-payday lending, and realize some of the other factors that will ultimately play into this.  

The problem is that the Economist does not make good points, and I addressed his argument fully.

But at least you an I now agree. In your first post, you suggested that you agreed with the Economist that an interest rate cap would eliminate the industry. It will not.

You now say a cap "will inevitably run some of these places out of business." (emphasis added) Exactly. It will run the people who require predatory rates in order to make money out of business. But your position is now opposed to that of the Economist, who maintains that a cap will wreck the entire industry and take option form from borrowers. It will not do that.

In fact, the payday lending industry operated in many states that have caps.

And by the way, I am not opposed to payday lending. I am opposed to predatory lending that targets the most vulnerable and most needy of our citizens and traps them in a never-ending cycle of debt.  

Where will "the most vulnerable and most needy of our citizens" go to borrow money for an emergency?

The banks?  Ha!

The credit unions?  Ha!

No way will banks and credit unions take the risks involved in lending to those with poor credit.  Cap the rate and payday lenders will shut down.  It is not worth the risk to them.

It is real easy to take a high and mighty position to kill the only lenders available to less fortunate Virginians when you are viewing the world through the windshield of your BMW.  But the financial world looks much different for those at the bottom of your food chain who may not even own a car.

Fight against payday loans and let the poor and needy eat cake.  Or support a compromise that will enhance consumer protections and continue to provide a source of credit to hundreds of thousands of Virginians...

A few things to clear up with the mis-information you are dishing out:

1.  Payday Loans were covered under the Commonwealth's Usery laws prior to 2002 when Payday Lenders were given a special exemption to charge above the 36% cap.  These laws were in place to protect people from this very type of predatory business.  

2.  As to where to people go if there are is no Payday Lending, well... where did they go before the 2002 Payday Loan Act?  

3.  The only instance that I have seen when you lend someone money and interest isn't calculated on a loan in APR (Annual Percentage Rate) are on Payday Loans.  Car Title Loans I can't speak to.  The fees that go along with lending money are calculated as APR by everyother money lender in the country and most likely the rest of the world.  

4.  The Payday Lenders and Car Title Lenders have proven that low income, economically challenged, the marginalized have economic power, to the amount of $1.3 billion in 2006.  Wow!  That is a market that Credit Unions in North Carolina and other states that capped or banned Payday Lending have filled the void.  In North Carolina, the State Employees Credit Union's small loan program only charges 12% on this type of loan, of which 5% goes directly into a Savings Account for their customers.  The Credit Unions in Virgina are doing the same, with a variety of small loan programs.  Go to www.virginiafairloans.org/alternatives.html to see a list of alternatives as well as a list of Virginia Credit Unions where people can contact to find out the details of their short-term small loan programs.  The difference with these types, they give borrowers a much longer period of time to pay off a loan like this.  On a two week loan, only 1% of Payday Loan Customers pay it off within that period.  

5.  The FDIC has a pilot program that is open to all Banks, that insulates them from any risk associated with lending to high risk borrowers (that means people who use Payday Lending) with the interest rate less then 36%.  Also, if Banks would take the leap and amend their Community Reinvestment Act Plans to include programs for low interest, short-term small loan programs, they could really be hero's in their respective communities.  

6.  Goodwill Industries has been working on a short-term small loan program that they would offer in their stores.  The interest rate would be less than 36%.  

The Payday Lending Industry's existance is a testament to how they view the least financially educated, savy, in society.  They do thing that people are stupid.  They throw out phrases and talking points to their supporter and emloyees to distract from the real issue,... Predatory Payday Lending is the path to Financial Oppression.  

If it were only about the practice of Payday Lending and they did their business in an ethical manner, then this issue would not have so much attention.  But it's not.  The ruling by the State Corporation Commission against Check 'n Go, while the details weren't disclosed, are the lion share of why this happened.  Boarder line identity theft by pretending to be the Checking Account holder to see if they had the money in their account to pay off their loan, cashing the check before the funds cleared, and then the account holder having the double wammy of paying for their Payday Loan and then being hit by an overdraft fee from their bank.  Hounding family, friends, and employers of Payday Loan customers to collect their money.  Pretending to be a Police Officer or Deputy Sheriff and telling their customers that if they didn't pay off their Payday Loan, it was a Felony.  The number of legal actions against Payday Loan Customers has steadily climed to more than 12,000 in 2006.  Also, having a Payday Loan customer that pays off their loan and still sueing them after the fact, because they didn't think they would challenge it, thus charging them the Court Fees.  Are you kidding me, reform?!!  

Oh, by the way, according to Payday Lending Industry whistleblowers, the industry has run the business model and they determined that the could still make lots of money with a cap, even as low as 18% APR.  Rather than operate in states with interest rate caps, they close down their stores and focuse on states with no caps.  If the did operate in states with caps, it would likely trigger the rest of the states to do the same.  

It is really sad that it takes an issue like this, just like Hurrican Katrina, to see that the least affluent are targeted and preyed upon by this industry.  Is there a demand for short-term small loans?  No question, there is.  It is even more sad that when comparing Payday Lending in Virgina and Loan Sharks, the Loan Shark is a much better deal.  The interest rates on Credit Cards, Cash Advances on Credit Cards, are high but are far less expensive than a Payday Loan.  This also shines the light on another fundamental problem, not just in Virginia, but our nation.  Financial illiteracy.  We need to attack this in our primary and secondary schools with more education.  Not asking to teach out kids about "sex" or anything, but the place we learn about personal finance is generally at home.  

All "do-gooders" aside, Payday Lending is just wrong.  The interest rates are extreemly high and the loan period is way to short.  The only real reform is to either repeal the 2002 Payday Loan Act or to pass the 36% Cap.  Payday Lenders let's be honest here, its your choice to stay or go.  

Another problem area involves lenders who make "short-term" loans with the borrowers giving their vehicle titles as collateral.  I wonder how many borrowers lose their vehicles because they are unable to repay the loan.

Re. payday loans:  I think a 36% cap is way too high and if these types of loans can't be prohibited in VA, then there must be strict oversight of the lender community.  Once again, the poor are being screwed.

Car-title loans are more or less completely unregulated in Virginia. Bills last year to regulate them failed for a variety of reasons, both good and bad.

Again, what is needed is a rate cap that will eliminate predatory practices. Outlawing these loans is not the answer, because people do need access to credit. But the law ought to ensure that greedy lenders do not take unfair advantage of Virginians and charge them 250%+ interest rates.