Push on to limit interest rates on payday, car-title loans
Former Gov. Tim Kaine signed a much-trumpeted reform of payday lending in 2008, but loopholes in the industry-written law were quickly exploited by lenders, who have since moved on to other high-interest loan products that have proven to be highly marketable in the midst of the ongoing economic slowdown.
Staunton City Councilman Bruce Elder led a grassroots effort in 2007 and 2008 that helped draw attention to the issue by getting more than 60 local governments to sign on to a resolution calling for the General Assembly to move toward substantive reform. Elder is back at it again, leading a push that has more than 50 localities engaging state lawmakers to pass a hard interest-rate cap on loans.
“A couple of years ago, i think what you saw is that there were still people who thought that the industry had some legitimacy and that they were providing a good service. Now I think you can look back and say that they weren’t negotiating in good faith, that the industry continues to produce a loan product that preys upon people on fixed incomes, people on disability incomes and Social Security incomes, it preys on financial illiteracy in minority communities,” Elder said.
“If we’re looking to rebuild a weakened economy, we have to rebuild it for everybody,” Elder said.
The resolution passed first by Staunton City Council in May has localities asking the General Assembly to impose a 36 percent cap on interest and fees associated with loans. The annual percentage rate on payday loans, car-title loans and related loan products is in the 300 to 400 percent range.
The industry markets its products as being low-cost and hassle-free, attracting consumers who either don’t want to go through credit checks or are afraid that their credit would disqualify them from being able to access more traditional loan sources, said Dana Wiggins, the responsible lending coordinator at the Richmond-based Virginia Poverty Law Center.
“These lenders are on television, on the radio, nearly every hour of the day. They know how to target people. They know how to push those buttons and get people to come to them,” said Wiggins, who notes that it’s not just those on the economic fringes making up the customer base these days.
“With the turn in the economy, more and more middle-class people are seeking out these loans as a quick fix, and they’re realizing how onerous the terms are for these loans. And the people who are more middle class who are calling our hotline – they’re just totally shocked. They think these loans should clearly be illegal,” Wiggins said. “They get the loans, they look at the storefront. They say, There’s a storefront, they’re on a main street in my town. You would think is being condoned by the government because they’re out in the open and not some back alley. But after being in the loan and not being able to pay it off because of how high the interest is, they’re like, How is this even legal? They just really had no idea.”
There’s another impetus for change, then. You have the localities banding together again, as they did in 2007-2008, and now you have a new group of disaffected consumers. “As more people get to understand the industry and how it works, I definitely see a shift in the direction of taking stronger action,” Wiggins said.
The tough part to the effort, said Ward Scull, the cofounder of the Newport News-based Virginians Against Payday Loans, is whether the General Assembly gets it.
“When I got involved in this, I never realized it would take so long to get this squared away in Virginia. Social-reform legislation apparently takes a lot longer than I ever thought it would,” said Scull, a moving-company executive who with retired local-government official Mike Lane launched Virginians Against Payday Loans in 2007.
Scull applauds the efforts of Elder to put pressure on state legislators, and has hopes that the General Assembly will take action to limit interest rates and fees in its 2011 session.
“Hopefully legislators will listen to what their constituents are saying. 2011 is an election year. Hopefully this session they’ll do the right thing for the right reasons,” Scull said.
Story by Chris Graham. Chris can be reached at freepress2@ntelos.net.
The right to vote
Groups urge Kaine to restore voting rights for ex-felons
Staff Report
News Tips: freepress2@ntelos.net
Ten Virginia civil-rights and faith-based groups have joined together to ask Gov. Tim Kaine to issue an executive order that would restore voting rights to most or all of Virginia’s 300,000 individuals who are being denied the right to vote because of a felony conviction, and to put in place a process for automatically restoring rights to others who complete their sentences in the future.
The letter sent earlier today is signed by the following organizations: NAACP Virginia State Conference, Virginia League of Women Voters, Virginia Interfaith Center for Public Policy, Virginia Poverty Law Center, Virginia Organizing Project, STEP-UP Inc., Virginia CURE, The Northern Virginia Coalition, American Civil Liberties Union of Virginia, and The Rutherford Institute.
Many other Virginia organizations, including the Virginia Catholic Conference, the Virginia Conference United Methodist Church, the Old Dominion Bar Association and Delta Sigma Theta Sorority Inc. State Social Action Task Force have also called for reform of Virginia’s felon disfranchisement law. Read more
An open letter to Gov. Kaine
Dear Gov. Kaine,
As your term as governor comes to an end, the focus in Virginia turns to the election to select your successor.
As you reminisce on your achievements as governor of Virginia, you will find that you earned a rightful place in the history of Virginia as a overnor who has left a substantial legacy in areas as diverse as the environment, energy, education and business. You have worked hard to ensure the economic future of our citizens in a time of national and international economic turmoil. Virginia will remain a state that is a model for others to emulate and a magnet of business and development as well as an ideal place for families. Read more
Jay Speer | “Let them eat cake”
This is what is seems some legislators have been telling victims of predatory lending for years. Or put another way, if we take away payday and car title loans at 350 percent interest, where else will these people turn for help? Should we just “Let them eat cake”? Or are there other solutions? Read more
Jill Hanken | Will Congress take up a health-care solution?
As we recognize “Cover the Uninsured Week,” we can note the ever-increasing number of Americans who don’t have health insurance as well as those who can’t afford the spiraling costs of health insurance premiums and required out-of-pocket expenses. The average health insurance premiums for family coverage have skyrocketed 90 percent since 2000, leaving millions of Americans struggling to meet their health expenses or facing bankruptcy for medical debt. Three out of five adults having problems paying their medical bills had insurance at the time they incurred their debt. Read more
Harrisonburg: Attorney honored for advocacy work
Staff Report
Harrisonburg attorney Tom Domonoske was recently named as one of the first two recipients of the John Kent Shumate Jr. Advocate of the Year Award given out by the Virginia Poverty Law Center.
Domonoske, a nationally-recognized lawyer in auto-sales fraud cases, was honored for his work with Blue Ridge Legal Services. Domonoske has co-counseled on a number of cases tried by BRLS, including litigation involving payday lending, car-title lending, mortgage-rescue scams and others.
“Tom’s commitment to and passion for justice is manifestly evident in everything he does. Tom eschews the pursuit of monetary gain in his practice of law in favor of attacking injustice on an individual and systemic level. Tom does not merely ‘demonstrate’ his passion and commitment to justice. He lives and breathes it,” said John Whitfield, the executive director of Blue Ridge Legal Services.
The award, in honor of the late John Kent Shumate Jr., a VPLC board member, will be given at the Statewide Legal Aid Conference on Nov. 6 in Virginia Beach. The award is given to both an attorney and non-attorney in Virginia who have made an impact in helping low-income residents of the Commonwealth.
Jill Hanken: Ryan budget proposal is an outrage
Posted by afp on April 8, 2011 · 3 Comments
Will your elderly relatives need Medicaid for their nursing home or other long term care? The proposal would turn Medicaid into a fixed block grant, forcing states to either pick up more health care costs or cut their programs. Virginia’s Medicaid program serves nearly one million elderly, disabled, children, and pregnant women each year. A full 70% of Virginia’s Medicaid spending is for elderly and disabled people. But our program is already one of the leanest in the country, now ranked 48th in the nation in per capita Medicaid spending. A block grant would make Virginia’s program even more restrictive.
Do you expect to get Medicare when you turn 65? The proposal radically changes Medicare, turning it into a government voucher program for private insurance for seniors who enroll after 2022. This will eliminate current coverage protections and certainly raise out of pocket costs.
Do you know any unemployed workers who needed food stamps to keep their kids fed? The proposal would also convert SNAP/food stamps into a fixed block grant to states, eliminating the program’s ability to respond to economic crises, such as a recession.
Do you want to send your children to college? The proposal would drastically cut Pell Grants for over nine million low and middle-income students. Many simply won’t be able to get a college degree. Other educational programs from pre-school through high school and technical training are also on the chopping block.
This proposal is completely lopsided. Two-thirds of the cuts come from programs that provide essential services to low and middle income populations. At the same time the resolution gives more tax cuts to millionaires, billionaires and big corporations.
Ryan’s budget is not a balanced approach to long term deficit reduction. It is an outrage which should be rejected
Filed under Blogs · Tagged with budget, federal budget, medicare, paul ryan, social security, virginia poverty law center