'Fiscal responsibility' touted

A national free-market group holds its first local meeting in Newport News.

By JON CAWLEY | 757-247-4635

Daily Press, February 17, 2008

NEWPORT NEWS - Fiscal Reaganites sought to gain a Hampton Roads foothold Saturday with a town-hall style meeting that drew a congressman and two state delegates.

About 65 people crammed into 40 seats and stood along the walls of a meeting room at the Holiday Inn Hotel and Suites in Newport News for about two hours. What they heard was U.S. Representative Rob Wittman and state Delegates G. Glenn Oder and Brenda Pogge discuss their legislative agendas while railing against excessive governmental spending and, frequently, the Democratic Party.

Washington-based Americans for Prosperity is touted in their brochure as "the nation's premier grass roots organization fighting for free-market policies that promote free enterprise and, in a very new way, the pursuit of the American Dream." According to their Web site, AFP has 21 state chapters, including Virginia.

Benjamin Marchi became Virginia's director in early January and said the group seeks to extend its reach throughout the state and into local issues.

"You'll see AFP showing up at board of supervisor meetings when they want to raise taxes and at the General Assembly for the same thing," Marchi said after the meeting, which was the first in the area. "The important thing is that folks take an active part in government. We're focused on one issue — fiscal responsibility."

Referring to a libertarian-minded think tank, Marchi said: "It's kind of like having a Cato Institute with a grass-roots army."

Wittman spoke of reforming the tax code and legislative earmarking, extending tax cuts and curtailing entitlement programs — particularly Medicaid, Medicare and defense spending, that he said would in five years account for 96 percent of federal government discretionary spending.

"If we don't get our arms around these particular issues we're going to have trouble, Wittman said. "We have to find ways of doing things without spending ourselves into oblivion."

Oder and Pogge both took the opportunity to criticize an expected $1.4 billion state budget shortfall that led Gov. Timothy Kaine to propose $220 million in cuts, much of it education related. Despite that, Kaine wants to increase spending on new and existing programs by nearly $300 million, Oder said.

"I don't see, from the governor's budget, a lot of sense," Pogge said. "We know when we can't afford it, we just don't go to Disneyland."

For the most part, the speakers preached to an already converted chorus who eagerly offered "amens," applause or grumbles to punctuate talking points. They became particularly riled when Marchi told them the state-run Virginia Lottery paid Donald Trump $250,000 and comedian Howie Mandel $860,000 in conjunction with the "Trump Card" and "Deal or No Deal Sweepstakes" games. Lottery officials could not be reached Saturday, but washingtonpost.com confirmed a similar account.

Poquoson resident Chuck Adkins said he found the meeting informative.

"We have to budget to make ends meet and the government should do that, too," he said.

HB 12 Payday Loan Reform Bill

“Breaking the Cycle of Debt”

Reform on payday lending may be in flux

A top Democrat could stand in the way of a compromise on the legislation.

Daily Press

By CHRIS FLORES  247-4738

February 24, 2008

For the second straight year, the fate of the $1 billion-a-year payday lending industry in Virginia is up in the air at the General Assembly.

But in a plot twist from last year's legislative drama, the debate might turn into an intraparty battle between Democratic Gov. Timothy M. Kaine and the leader in the Democratic-controlled Senate, Richard "Dick" Saslaw. This year, Republicans crafted a bill to give Kaine the tighter rules that he asked for, and Saslaw countered with an industry-backed bill.

Saslaw, of Fairfax County, was the roadblock a year ago, pulling his own bill of industry-supported reform so Kaine couldn't amend it with tougher restrictions.

This year's move by Saslaw took on added significance after his power was increased — and theoretically, so was Kaine's — by the Democrats winning the Senate in the fall. Kaine needs Saslaw to push the governor's agenda through the Senate, and Kaine hasn't confronted Saslaw.

Before Saslaw introduced his own payday bill in the Senate, another payday reform bill from Del. G. Glenn Oder, R-Newport News, was supported by House of Delegates Democrats. Oder's bill was tougher on the industry.

"It's a very conflicting situation for (Kaine) to be in," Oder said.

The controversy

There's little debate payday loans are used responsibly by many. The industry says the product is for people who need to get through emergency cash crunches. Lawmakers are grappling over the question of how many Virginians are falling into an endless cycle of debt and how those people can be helped without shutting down the industry.

The payday industry gets an exemption from state law that prohibits lenders from charging more than 36 percent interest annually. The reasoning is payday loans are only for two-week periods and used on a limited basis.

But the average Virginian who uses the loans took out 8.3 loans per payday lending company in 2006, a number that has steadily been rising since the industry was legalized in 2002. That average person uses 1.7 companies, according to the industry, so the average Virginia customer takes out about 14 loans a year.

Asked in a phone interview how many loans someone can take and still be using them responsibly, Saslaw said, raising his voice seemingly in anger, "We don't have a right to tell these people how many loans they can get."

'Repeat business'

Payday lending opponents were surprised and pleased with a House bill sponsored by Oder this year that would have reined in the industry, but the lenders lobbied strongly against it.

The bill limited annual interest rates to 36 percent, but it allowed fees that would essentially make the interest rate closer to the 390 percent that borrowers now pay for the loans. The part of the bill that payday opponents thought would help people who fall into a spiral of debt was an annual limit of five loans per customer.

Lenders are fighting that limit. Oder said he didn't understand why anyone would need more than five loans if they were used only for emergencies. Television commercials sponsored by the industry have emphasized that people could have any number of emergencies, but Oder isn't so sure that's the real business model of the industry.

"It sounds to me like there's a significant need to attract repeat business," he said.

The bill sailed through the full House 91-7. That left the Democratic-controlled Senate to accept the House compromise, fold it into a Senate bill or come up with its own.

The key player in the Senate would be Saslaw, who chairs the Commerce and Labor Committee that would consider the bill.

Bill meets resistance

Oder said he was still hopeful as it became evident to payday lending opponents and House leaders that Saslaw was producing a bill in place of the House compromise.

"I thought that bipartisan support for a bill out of the House would clear the Senate," Oder said.

Saslaw said that he hadn't heard from the governor on the issue and that he thought Kaine would sign any compromise between the House and the Senate.

Kaine spokesman Gordon Hickey said it wasn't the governor's place to urge Senate Democrats to adopt the House reform.

Saslaw argued that the bill he brokered in the Senate represented more significant reform than the House. He said the bill that he crafted with Sen. Phillip P. Puckett, D-Russell, would help people who needed it most.

The Puckett-sponsored bill lets lenders charge a slightly higher fee than the House bill and allows one loan at a time. But there would be no limit on the total number of loans a year. It also institutes a voluntary repayment plan for borrowers struggling to pay back the loans, and they would be barred from taking any more payday loans for three months after signing up for such an agreement.

The bill went through the committee and met resistance from the full Senate. Mamie Locke, D-Hampton, tried unsuccessfully to amend the bill on the Senate floor to make it more like Oder's bill.

Now the House and Senate are vetting each other's dueling payday bills. Each chamber might change the other side's bill or vote on it in its current form. There might be a compromise before it hits Kaine's desk.

Hickey said that Kaine planned again to amend whatever bill came to his desk if it didn't protect the vulnerable and that there was no "bright line" definition of what would be acceptable.

Defending the industry

Saslaw says he wants to help people who don't use the loans responsibly and that he has been told by the industry only about 25 percent of the borrowers get into trouble.

"They never stop getting loans," said Saslaw, when asked to define what "trouble" was. "They do it all year long."

Saslaw said he thought that anti-payday-loan activists were helping people who didn't want to be helped.

"Nobody who is in opposition to payday loans has ever taken one," he said.

Saslaw's district has one payday loan store, while the Hampton Roads and Richmond regions have hundreds.

Copyright © 2008, Newport News, Va., Daily Press

 Bristol Herald Courier

Published February 21, 2008

“Two versions of payday lending reform are moving through the Virginia legislature. Only one of them – the House of Delegates’ version – represents a legitimate attempt to rescue state residents who are drowning in a pool of high-interest debt. The Senate version is a gift to an odious industry. We urge lawmakers to get behind the House-crafted compromise before the session ends March 8. Virginia needs real payday lending reform not a sham measure.”

 The Free Lance-Star

Editorial Published February 19, 2008

“Last week, both chambers of the state General Assembly passed bills to rein in the predatory practices of the last-ditch lenders. But they're miles apart, with the Senate passing an industry-driven measure and the House of Delegates endorsing a much stricter overhaul. The House, usually the more conservative outfit, has the better set of ideas. Which is precisely why the payday-loan industry has lined up against its plan.

House members voted overwhelmingly to cap payday loans at 36 percent annual interest--the same top rate allowed other lending institutions. The House bill would allow only one loan per individual at a time, and limit the number of loans per person to five per year. It would also require that the State Corporation Commission create a database of payday-loan customers to track the industry.

Those are reasonable, basic, and badly needed steps to reform an industry that thrives by taking advantage of those who can least afford it. That includes the elderly.”

Other Newspapers Previously Backing HB 12

·        The Richmond Times-Dispatch

·        The Virginian-Pilot

·        The Roanoke Times

·        The Daily Press