The South Carolina Senate is preparing to debate legislation to further regulate the payday lending industry. The House failed to take up the Senate proposal last year, but this year the House passed a somewhat watered-down version.
Republican Senator Wes Hayes on Tuesday afternoon encouraged senators not to back down, but to push for meaningful legislation. “If what the industry is telling us is true, that the average borrower uses payday lending eight times a year, and they’re worried about being limited to 17 loans per person per year, does that tell you something about payday lenders in this state, where they’re making their money? They’re making their money by people who borrow more than 17 times a year.”
Richland County Democrat Joel Lourie expressed concern to Hayes that the House bill would raise the payday lending cap per loan from $300 to $600. “Isn’t it true that a $600 limit would put us as the highest cap in the Southeast?,” asked Lourie. Hayes responded that that was correct.
Lourie continued. “Higher than Georgia…no, Georgia banned it. Six-hundred would be higher than Florida, at $500. We have to think about, skip around those states around us who have already banned the industry all together.”
Even though the House version doubles the lending cap, it also stipulates that a borrower can only take out one loan at a time. Currently, there is no limit on the number of loans a person can have. To control that, the House bill would implement an electronic data system, registering all borrowers.
While Hayes acknowledges that the House bill is an improvement over current law, he says the previous senate version was better, and required a seven-day waiting period between each loan given. The senate bill also tied each loan to a recipient’s income, stating that a person could not borrow more than half of their income during that loan period. The more recent senate version now before the senate, which grew out of a compromise in the Senate Finance Committee, would limit borrowers to one loan at a time,caps the amount at $500, requires a two-day “cooling-off period” between each loan and provides for one extended payment plan each year. It also requires consumer credit counseling, and increases the licensing fees for lenders to generate extra money for enforcement of the regulations.
The Democratic leader in the Senate, John Land of Clarendon County, defended the industry, at least it’s right to exist, saying that there’s a need for payday lenders. “Certainly there is some abuse, but I don’t if the abuse is coming from the payday lender. Some of my friends are so opposed to this, they’re angry. And I keep asking myself, are they angry at the person borrowing the money, and the fact that this person needs to borrow money?”