Payday Loan Times

The faxless payday loan lending industry says it will be kinder and gentler to consumers.

They say they’ll spend $10 million on a campaign to warn people to borrow responsibly.

Don’t buy it. If you get caught watching the industry’s fist full of $10 million, you’ll miss what its other hand — loaded with a chunk of the other hundreds of millions these lenders are snatching from desperate, working-class consumers — is doing.

Payday cash advance lenders are spending lots of their immoral gain currying favor with legislatures and statewide elected officials, including those in the Palmetto State, as well as various community, civic and civil rights organizations.

Payday lenders have been throwing money around quite liberally over the past several years as consumer advocates and others have asked lawmakers — including our state Legislature — to rein in the industry that charges triple-digit interest rates on short-term bad credit cash loans that trap borrowers in long-term cycles of debt. S.C. lawmakers are considering several proposals, including two that would outlaw the practice.

Banning it would be the best answer, but lawmakers don’t seem willing to do that. The only compromise should be in favor of a bill that would cut the usurious 391 percent annualized rate lenders can now charge to 36 percent.

Consider lenders’ contributions in South Carolina. Over the past four years, payday and title lenders have contributed $157,032 to statewide candidates and lawmakers, according to the National Institute on Money in State Politics, a nonpartisan group that tracks contributions in all 50 states. (Search its database online at www.followthemoney.org.)

About 80 percent of those contributions appear to have come from easy payday loan lenders.

The top donor is South Carolina’s Advance America. The nation’s largest payday lender contributed $39,000 over the four-year period. Add in contributions by Billy Webster, one of its founders, and that amount rises to $49,882. The next-closest donor over the four-year period is Check Into Cash, which contributed $12,300 during that time.

The lenders spread money around to statewide officials and lawmakers in both major parties, but five people received well over half of the donations.

Between 2003 and 2006:

• Attorney General Henry McMaster received $33,000
• Lt. Gov. Andre Bauer got $23,250
• Sen. Tommy Moore got $25,500 during his run for governor
• former Treasurer Grady Patterson received $10,000
• Sen. Greg Ryberg, who ran unsuccessfully for treasurer, received $7,000.

These no fax cash loan lenders aren’t simply trying to help the best candidates win. They’re fighting to keep their gravy train rolling in South Carolina, where they can still rip borrowers off with little regulation. In South Carolina, they collect $186 million a year in fees; the figure is $4.2 billion nationwide.

Advance America is active — and connected — inside and outside the State House:

• It contributed thousands in the 2002 elections to Republican and Democratic candidates for statewide office, including candidate Mark Sanford and then-Gov. Jim Hodges. In 2004, it provided flights for former House Speaker David Wilkins, now U.S. ambassador to Canada, and Gov. Sanford to Utah and Seattle, respectively.

• The payday loan company has sponsored the Columbia Urban League’s Equal Opportunity Day Dinner and flown U.S. Sen. Joe Biden to Columbia to speak at a state NAACP Freedom Fund event. It donated $50,000 to the United Way of the Piedmont.

• Guess who’s president of Erwin-Penland, the marketing firm that represents Advance America? None other than state Democratic Party Chairman Joe Erwin.

• Local attorney Steve Benjamin is a member of Advance America’s board and has been a lobbyist for payday lenders in various states. In his unsuccessful bid for attorney general in 2002, Mr. Benjamin got support from cash advance payday loan lenders across the country.

Payday and title lenders are flashing cash in other states as well. Consider Georgia, where lenders are trying to persuade state lawmakers to undo one of the smartest things they ever did — ban payday lending. The industry spent about $70,000 on campaign contributions in Georgia last year, the Atlanta Journal and Constitution reported.

The same has been going on in Virginia, where some lawmakers want to repeal the law that allows faxless payday advance lending, or at least make it tougher. A January Richmond Times Dispatch (Virginia) story reported that “Payday and car-title lenders contributed almost $180,000 to 110 of the state’s 140 legislators last year, an analysis of recent campaign reports by the Virginia Public Access Project shows.”

Some lawmakers say campaign contributions don’t affect debate or the shaping of public policy. While money might not — and mustn’t — buy votes, it buys access and the ears of politicians.

And it’s a scary thought that an industry such as this can pour six figures into state after state and gain access to our policy- and lawmakers that regular citizens don’t get.

Lawmakers must resist any temptation to allow no faxing payday loan lending to continue unchecked. They must choose consumers over deep-pocketed lenders. It’s disgusting that state officials and lawmakers would use money this sleazy business has stripped from struggling citizens to fund their campaigns.

Instead of allowing payday lenders to show them the money, lawmakers should show these loan sharks the door.

SOURCE: The State