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Virginia Sends a Signal to Payday Lenders

Filed under: Regulation, Virginia — Ryan Fiore at 12:40 pm on Monday, February 2, 2009

The Virginia Senate unanimously passed a bill Friday that that would fix a loop hole that was opened to payday lenders starting January 1st. A restriction was passed last year that prevented payday lenders to offer their loans as of January. However, it also approved the majority of the state’s nearly 800 payday lenders to be able to offer open-ended loans that can have unlimited interest rates. 

These open-ended loans allow payday lenders to charge any interest rate or fees that they would like as long as there are none in the first 25 days of the loan. The payday lenders’ willingness to offer these unregulated open-ended loans has lost them many of their former supporters. It was Senate Majority Leader Richard Saslaw, was one of the industry’s biggest supporters, bill that passed the chamber unanimously. After the bill passed Saslaw said ”I don’t believe in sending messages,” and ”I corrected a problem, and we’re not finished yet.”

Jamie Fulmer, a spokesman for Advance America, the nation’s largest payday lender, stated that ”It was never the industry’s intent to circumvent last year’s payday loan reforms by offering this line of credit product.” ”We saw an unmet need for access to modest, unsecured loans.”

Now the bill has to go to the Republican-controlled house, where its chances of passage are uncertain. Although Saslaw hopes to try and restrict payday lenders even further when the bill gets there. 

To read more about Virginia Senate says no to payday lenders head on over to The Washington Post.

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