Thur, 12 Feb, 2009

The S.C. House of Representatives gave its blessing to a controversial payday lending bill late Wednesday, giving easy passage to a measure supporters say will regulate the multimillion dollar industry in the state for the first time.

Payday lending opponents, who offered up more than 40 amendments designed to change the legislation, complained the bill only protects a business practice that preys on the financially distressed and the poor.

“This bill does nothing but strengthen the industry,” said freshman Rep. John Richard King, D-York, who opposed the bill, which passed the House 93-16.

Rep. Bill Sandifer, R-Oconee, who, along with Rep. David Mack, D-Charleston, shepherded the bill through the amendments and four hours of floor debate, said the measure contains “a great deal of consumer protection.”

“What would have happened is this business, without regulation — the potential for abuses would have continued,” he said.

The bill, which goes to the Senate, would raise the amount a payday lender could loan in a single transaction from $300 to $600 — the largest payday loan allowed in any Southeastern state.

The bill also limits the number of loans a customer may take out to one at a time, which bill supporters say would keep borrowers from assuming multiple loans they cannot afford to reback. The bill establishes a database to track and prevent multiple loans.

Lenders must inform borrowers at the point of sale that an extended repayment plan is available if the borrower is unable to repay on time. Payday loans typically are required to be paid within two weeks.

The industry has long been criticized for the exorbitant interest rates borrowers can face. If they renew their loans over a year’s time, interest climbs to 391 percent annually. Payday lenders charge $15 per $100 loaned.

An amendment offered by Rep. Harry Ott, D-Calhoun, limits to 10 the number of consecutive payday loans a customer can assume before a mandatory cooling-off period.

“(Payday lenders) love our system in South Carolina,” said Rep. Alan Clemmons, R-Horry, who unsuccessfully offered amendments that attempted to lower loan amounts, more strictly limit the number of consecutive loans available and end electronic debiting of consumer’s checking accounts.

Payday lending opponents came to Wednesday’s debate aware they lacked the votes to stop the legislation, which was sponsored by House Speaker Bobby Harrell, R-Charleston, and 73 co-sponsors within the 124-member House.

Harrell, and bill supporters, said the state is better off regulating the industry than banning it, arguing the loans fill a need in the state.

Mack, who recently chaired the Legislative Black Caucus, said poverty drives the need for payday loans. “I would never sell my people out,” Mack said, defending his support of the bill.

As the House-passed bill goes to the Senate, observers say that body is under a full-court press by industry lobbyists to approve it. The Senate, which came within three votes last year of passing a bill to ban the industry, is unlikely to rubber stamp the House proposal.

Senate President Pro-Tem Glenn McConnell, R-Charleston, has an identical payday lending bill pending in the Senate. About 20 senators have signed on to the measure.

Source:Thestate.com