No payoff in payday lending
Here’s a bipartisan effort that we could do without.
Two Republican state senators, Jerry Tillman and Tom Apodaca, have teamed with Democrat Clark Jenkins to introduce Senate Bill 89 for “deferred presentment.”
That’s code for “payday lending,” a predatory short-term loan practice that exploded in North Carolina in the 1990s before the state wisely outlawed it in 2001.
The bill as introduced would amend the Check Cashing Licensing Act so that a check casher/lender could make cash loans of up to $500 for a fee of 15 percent.
Attorney General Roy Cooper made it clear on Thursday that he’s vehemently against this effort to revive the practice after he and the office of the Commissioner of Banks fought in the courts to shut down illegal payday lenders. The last one closed in 2006.
Last month, through pressure from Cooper’s office and other North Carolina consumer advocates, Regions Bank ceased a short-lived payday-type loan procedure. The bank originally had argued that they could get away with it because it was chartered in another state, but relented.
Now, the General Assembly may be about to throw the door open wide for a return of predatory lending with excessive loan rates with short-term payback.
“This is the same old rip-off we ran out of our state years ago,” Cooper said. “These overpriced loans trap borrowers in a cycle of debt many cannot escape. Payday lending was a bad idea then, and it’s a bad idea now.”
North Carolina enjoys the stature of having been the first state to shut down payday lenders. Outlawing this practice saves millions of dollars each year for families that struggle to survive paycheck to paycheck, according to the North Carolina Coalition for Responsible Lending.
As Cooper noted, that bad idea hasn’t gotten any better.
Let’s not put our poorest families at even greater risk of falling into deeper debt.