The following is a paraphrased editorial from The Macon Telegraph:

Three years ago, the Georgia Legislature took a good look at the no fax payday loan industry, and it didn’t like what it saw. It didn’t like unscrupulous lenders targeting military personnel for high-interest loans. It didn’t like lenders trapping borrowers into situations in which they had to take out second, third and even additional loans to pay off earlier high-interest loans.

It saw that lenders weren’t taking into consideration whether or not borrowers had sufficient income to pay off loans. And to top it off, the Legislature didn’t like that, without any question, insufficient oversight of ethically-challenged lenders was giving the state a black eye. So, with justification, the General Assembly kicked payday advance lenders out of the state.

Now, however, lawmakers are considering whether, in banishing the payday lending industry, their action had the unintended consequence of removing the means for people who have little or no credit to obtain money to cover emergencies.The Legislature is considering a measure, House Bill 163, that, if approved, would authorize and license lenders that make short-term, unsecured loans. These bad credit cash loans would be made under strict rules and government oversight.

Georgians welcomed legislative action in 2004 that forced payday lenders to leave. But following a thorough inspection of House Bill 163, which spells out how and under what conditions short-term loans of one month or less could be permitted, as well as guarantees that would protect borrowers from predatory lending practices, we have cautiously - and we emphasize cautiously - come to believe Georgia might be right to test the water again.

This proposed measure is more restrictive than legislation permitting no faxing payday loans in states contigious to Georgia - Alabama, Florida and South Carolina - where Georgians cross state lines daily to secure short-term loans. The state would, through fees paid by lenders, have the financial means to police the industry and there are harsh civil and criminal penalties for violations.

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Feeling the pressure of proposed legislation to do more to regulate Utah payday loan lenders, industry representatives have taken to the airwaves with commercials that are basically “buyer beware” messages.

The Legislature has refused to impose interest-rate limits, even though the “average” interest rates charged by these establishments is 521 percent annually. Some charge as much as 900 percent a year.

Absent a clear mandate from state lawmakers, the industry says it will police itself. But the issue is not dead. Some city councils are considering what they can do to curb the proliferation of these online payday advance businesses, which outnumber all the 7-Eleven, McDonald’s, Burger King and Subway stores in Salt Lake County combined.

Earlier this week, the Sandy City Council approved an ordinance that limits the number of payday loan businesses to one per 10,000 residents. The ordinance, which passed on a 4-3 vote, also requires that these personal cash loan businesses must be located at least one mile from one another. The Salt Lake City Planning Commission also is studying the issue.

The Sandy City Council is to be commended for its attempts to curb payday lending, which can imperil unsuspecting people who are already in financial straits. Limiting the numbers of fast payday loan lenders in a given municipality may help deter borrowers, or at least curb the convenience appeal many payday lenders use in their marketing.

No matter how cities craft ordinances to limit these businesses, it will be impossible for elected officials to save borrowers from themselves. These businesses serve people who have no access to traditional forms of credit. They may turn to these cash advance payday loan lenders as their last resort.

But do these lenders have to charge such large interest rates?

In Utah, payday loan stores collect at least $69 million in excess, “predatory” fees each year, according to the Center for Responsible Lending. Despite assuming considerable risk in offering these loans, it would appear that these businesses make more than handsome profits.

The Legislature isn’t about to impose interest caps. Thus, the issue of bad credit payday loans is in the hands of city and county governments. We hope they will follow Sandy city’s lead in limiting the numbers of these establishments, which could conceivably entice consumers to consider other options or at least to become better educated about the long-term consequences of quick loans.

North Carolina Treasurer Richard Moore’s office has asked companies that manage the state’s pension funds to make sure that they don’t hold stock in payday advance loan lending companies.

The Charlotte Observer reported this week that the pension fund last year may have invested nearly $11 million in as many as five payday-lending companies - at the same time that Moore was leveling criticism at the companies.

The newspaper reported yesterday that the pension fund’s chief investment officer wrote to the state’s outside managers this week, asking them to sell shares in any such payday loan company. The order applies to funds that pick their own stocks, not those that follow a certain index, such as the S&P 500.

The law allowing payday lending in North Carolina expired in 2001, but some companies continued to do business here until last year, when state officials closed a loophole that allowed them to stay. Moore criticized the check cash advance lenders last year for giving short-term loans with the equivalent of annual interest rates of more than 500 percent.

“A civilized society does not allow these kinds of interest charges,” he said in May.

Earlier this week, Moore’s office said that the fund sold its shares in four of the payday-lending companies identified by the Observer and were reviewing the fifth.

The pension fund has a total value of about $70 billion and owns shares in about 7,000 companies.

Moore wrote a letter Thursday encouraging companies that devise stock indices to remove providers of payday cash loans from their benchmarks. He said he has a duty to “promote responsible and solid corporate governance with the goal of fostering healthier companies that ultimately will yield stronger returns.”

The pension fund has asked the nonprofit Community Reinvestment Association of North Carolina to come up with a list of guranteed payday loan lenders to share with its managers. Executive director Peter Skillern said that the group also will develop guidelines by which companies can be judged in the future.

Despite early momentum in the Legislature to rid Arizona of payday cash advance lenders, the industry and its friends at the Capitol continue to dominate the political debate — to the financial detriment of the state’s poor.

Eight bills were introduced during this legislative session that would have either effectively shut down payday lending or placed major curbs on the industry’s activities. The Republican leadership has swatted all the measures away without much of a fight.

All payday loan online eight bills failed to get out of committee despite the fact that about half of them were sponsored by members of the Republican majority.

Tucson Republican Rep. Marian McClure sponsored HB 2224, which would have prohibited the renewing, or “rolling over,” of payday loans. Her bill was the only one that got as far as a committee vote. It failed 5-4.

The situation is so bleak for opponents of payday loans, which includes this newspaper, that maintaining the status quo would be seen as a victory.

The 2000 law that allowed payday lenders to do business in Arizona is set to expire, or sunset, in 2010. The sunset provision is seen by industry foes as the one saving grace to the law — and the last chance to get rid of payday lenders if legislative efforts continue to fail.
But it appears the sunset provision might also be in jeopardy, which we believe would be a permanent black eye for Arizona.

McClure told us that she is preparing a faxless payday loan reform measure in the form of a “strike-all” bill that would, among other things, make loans nonrenewable, limit the interest rate to a flat 15 percent for two weeks and institute a structured payment plan if a borrower is unable to pay back the loan on time.

However, as part of McClure’s reform package, she would do away with the sunset provision.
“We cannot even get payday-loan bills out of committee. A strike-all like this would at least have a chance,” McClure said. “It’s a realistic approach to the problem since we aren’t going to be able to get rid of payday lenders anyway.”

McClure said that even if the sunset provision goes into effect, the industry will fight through the courts to stay in business. Those lawsuits, she said, will keep them operating far beyond 2010.

She also said the growth of the industry on the Internet will mean Arizonans will still have access to expensive personal loans, no matter what the Legislature does.

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Two bills were introduced to the Kansas state legislature Feb. 15 aimed at restricting and regulating predatory payday loan lending in the state.

House Bill 2244 proposes to restrict no fax payday advance lenders from providing multiple loans to a borrower with two or more outstanding loans and to significantly lower the annual percentage rates of such loans.

HB 2245 addresses auto title loans. The bill proposes limiting the APR on title loans to 36 percent, which is the current Kansas restriction on fixed-term loans.

“I think for a number of states, the honeymoon is kind of over with payday lending,” said Holly Petraeus, the Senior Program Consultant for the Better Business Bureau’s Military Line, a program providing consumer education and advocacy for service members and their families.

Petraeus is also a military family member. Her husband, Gen. David Petraeus, is the current commander of Multi-National Forces-Iraq and former commander of the Combined Arms Center and Fort Leavenworth..

Her concern about fast cash advance lending to military members and their families led to chairing a roundtable discussion in early February convened by Kansas Attorney General Paul Morrison. Morrison intends for the roundtable’s recommendations to be added to HB 2244 as an amendment.

The two bills have several steps to go before becoming Kansas law. However, as Petraeus pointed out, several states and the federal government are taking a close look at predatory lending.

Payday lending is a small, short-term loan, usually for less than $500. The borrower pays a fee and is expected to pay the loan back in full, in two weeks. Petraeus said when quick payday loan lending was first established, it was presented as a beneficial service to people who just needed a little bit of help and couldn’t, or didn’t need to, qualify for a larger loan.

“Unfortunately it has turned out to be something else,” Petraeus said. “If you didn’t have $200 today, you are not going to have $200 extra in two weeks to pay it back.”

Therefore, borrowers take the cash loan out again and pay another fee. This can lead to a cycle of borrowing that can cause serious financial trouble. A report by the Center for Responsible Lending published in November said 90 percent of people who borrow from payday lenders borrow five or more times per year and 62 percent do so 12 or more times per year.

In 2005, Kansas had 358 payday lending stores. The average loan amount in Kansas was $262 and the average fee 15 percent. The 15 percent fee equals 391 percent APR. So a $262 cash advance loan in January could cost a person $1,286 by the end of the year.

“Again, it wouldn’t be an issue if you went in and borrowed it once and walked away,” Petraeus said. “But the average customer doesn’t.”

Petraeus said payday lenders will argue they are providing a service and fulfilling a need.

“I would argue they are creating an appetite for easy money,” Petraeus said.

SOURCE: The Fort Leavenworth Lamp

They sometimes charge customers an annual percentage rate of 1,040 percent.

Of course they need to be run out of town.

Isaac J. Bailey of The Sun News talking about banks, not the frequently vilified payday lenders.

According to the Consumer Federation of America, if someone overdrafts an account by $100 and has to pay a fee to the bank and the merchant within a two-week period, which is typical of no faxing payday loans, it could amount to a 1,040 APR.

And to think, the S.C. General Assembly, like a growing number of legislative bodies, is up in arms because fast payday advance lenders charge customers up to a 390 percent APR.

Legitimate banks allow you to buy a $2 candy bar with your debit card but don’t tell you your account has already been overdrawn. And they charge you $20 to $35 for that purchase - even though they can simply decide to not let you make it.

Also, overdraft charges, through bank debit cards, average about $34, according to the Center for Responsible Lending.

People pay an average of $2.17 for every dollar borrowed through such “cash loans.” That’s the equivalent of paying $217 for every $100 of mistakes you make while balancing your checkbook.

• Legitimate banks charge you for using someone else’s ATM to retrieve your own money.

• Legitimate banks sometimes raise the interest rate on Credit Card A if you make a late payment on Credit Card B.

• Legitimate banks camp out on college campuses and target freshmen who don’t have the knowledge or discipline to handle responsibly, let alone the bank account.

There is hardly ever much good said about easy payday loan lenders, and South Carolina is home to the largest. But this is from a report by the Federal Reserve Bank of New York:

Using a small set of data, we find that payday loan rates and fees decline significantly as the number of payday lenders and pawnshops increase. Despite their alleged naivete, payday borrowers appear sophisticated enough to shop for lower prices. … The simple fact that payday lenders have triumphed over pawnshops suggests that payday lending raises household welfare by providing a preferable alternative.

If you make unwise financial decisions or mistakes or get caught in an emergency, most financial institutions will charge you dearly.

Not just instant cash loan lenders.

The southeast Salt Lake Valley suburb of Sandy all but closed its borders to new Utah payday loan stores Tuesday.

The City Council voted 4-3 Tuesday night to restrict the number of “non-depository” financial institutions - those offering fast payday loans, check cashing, deferred-deposit advances or car-title loans - to one per 10,000 residents and require at least a mile between outlets.
Sandy currently has 10 payday loan stores. The city plans to include unincorporated islands in its head count when enforcing the new ordinance, boosting its population from 95,000 to 108,000, which means it has room for one more store.

Council members Scott Cowdell and Linda Martinez Saville, who voted against the measure, supported a stricter version that would have only counted population within the city limits and not allowed any new stores. Steve Fairbanks was the only council member who opposed any restrictions on the number of outlets.

In recent years, West Valley City, South Salt Lake, Taylorsville, West Jordan, South Jordan, Draper and Midvale have placed density restrictions on payday advance stores, making Cottonwood Heights Sandy’s only neighbor without such limits. Salt Lake County and Salt Lake City are considering similar action.

Tuesday, Sandy City council members worried their city - absent restrictions - would become a haven for check cashing stores.

“I don’t believe we should be legislating against specific businesses,” Councilman Chris McCandless said. But “we are the course of least resistance, and [the payday loan] business - like water - is going to come to us, naturally, without some restriction.”

John Swallow, Check City’s corporate counsel, doesn’t agree with efforts to limit the payday cash loan industry’s growth, but said, after the meeting, that he understands the council’s decision.

“It’s a snowball thing,” said Swallow, a two-time Republican congressional nominee. “Personally, I think the market would dictate the number of stores . . . [But] I can appreciate [the council members’] struggle.”

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Faxless payday loan lenders are on the offensive, making voluntary consumer protections.

But they aren’t enough. Quick payday advance lenders are predatory businesses, taking advantage of and making worse many people’s financial insecurity, and we wish that legislators had not allowed them to do business in the state.

Last month, payday lenders said they would allow some borrowers more time to repay loans and end ads that promote loans for frivolous purposes, such as vacations.

Those are shallow attempts at protections.

Bad credit cash loan lenders offer short-term loans that consumers repay with their next paycheck, but those unable to pay end up with fees that amount to more than 300 percent interest on an annual basis.

Oregon approved an interest cap of 36 percent for payday lenders, and Congress imposed the same interest rate on military payday loans.

But even 36 percent interest is a tough rate for people who live from paycheck to paycheck.

No, they shouldn’t be living like that. But the reality is that people often find themselves in that sort of position.

And we shouldn’t allow some to profit so disproportionately on someone else’s misery.

At the same time that N.C. Treasurer Richard Moore (pictured) sharply criticized payday advance loan lenders last year, he managed a state pension fund with holdings in as many as five companies in the industry.

The North Carolina pension fund that Moore runs may have invested nearly $11 million in payday loan lending companies, according to The Charlotte Observer. The fund has a total value of about $70 billion.

Moore’s office said that the fund has since sold its shares in four of the companies after finding them during a “routine review.” The treasurer’s office is now reviewing a fifth company, CompuCredit Corp., based in Atlanta, which operates one of three instant cash loan lending chains that agreed last year to stop making loans in North Carolina.

Sara Lang, a spokeswoman for the treasurer’s office, said that it’s difficult for the office to track every bad credit payday loan lender. The pension fund owns shares in about 7,000 companies. Lang added that Moore and his staff had for several years instructed the pension fund’s outside investment firms to not invest in payday lenders.

Payday lending has been illegal in North Carolina since 2001, but state officials last year closed a loophole that had allowed some companies to continue doing business here.

At the time, Moore criticized the cash advance lenders for giving short-term loans with the equivalent of annual interest rates of more than 500 percent.

“A civilized society does not allow these kinds of interest charges,” Moore said last May.

A state senator says a bill he introduced in the Senate would substantially reduce the interest customers pay when they take out Alabama payday loans.

The Legislature in 2003 passed a law legalizing cash loans and allowing the businesses to charge 17-point-5 percent per transaction.

However, Senator Bradley Byrne of Fairhope says most faxless cash advance loans are for small amounts and are to be paid back in a matter of weeks. He says if calculate the interest over a year’s time the annual interest rate is as much as - quote - “300 to 400 percent.”

The bill Byrne introduced yesterday would repeal the 2003 legislation and place payday loan businesses under the Alabama Small Loan Act. The act sets the maximum annual interest rate at 36 percent.