Payday lending bill is dead

Backstage politicking dooms measure that would have limited payday loans

By JIM DuPLESSIS - jduplessis@thestate.com

A bill to limit payday lending in South Carolina is dead for this year, a powerful state legislator said Wednesday.

State Rep. Harry Cato, R-Greenville, said he took umbrage at consumer advocates who criticized a House subcommittee that has not acted on the bill since it passed the state Senate on Feb. 19.

Cato, chairman of the House Commerce Committee, said a week ago that the bill would get a vote by May 20 or 21, when the banking subcommittee meets. He said he changed his mind after the AARP held a press conference Tuesday, criticizing the subcommittee for delaying the bill.

“It’s dead,” Cato said Wednesday. “The lay of the land changed a lot over the weekend and into this week. Everybody headed back into their corners.”

The AARP, which represents some older consumers, removed its support for the bill. The group cited moves by the subcommittee to strip the bill of provisions that would have required payday lenders to restrict loans, based on the income of borrowers. Instead, the AARP asked the subcommittee to amend the bill to ban payday lending and allow the bill to reach the House floor for debate.

“Every time we think the payday lenders have agreed to a compromise, they manage to get out of it,” AARP legislative director Teresa Arnold said in a statement.

Cato said he also was taken aback by comments from some senators who alleged subcommittee chairwoman Rep. Nikki Haley, R-Lexington, was blocking reform. “If there’s any blame, it’s mine,” he said.

Cato’s comments came as The Associated Press reported his political action committee had received thousands of dollars from payday lenders. Cato said the committee had received $5,000 over three years.

“I know in my heart, when I look in the mirror each morning, that contributions don’t influence me,” Cato said. “I answer to myself and what I know is right.”

The Senate bill, passed nearly three months ago, would have limited the size and number of loans payday lenders could issue to individual borrowers. The bill also includes a database to help state regulators enforce the law.

The General Assembly allowed payday loans in 1999.

Critics say the industry preys on poor borrowers, charging annualized interest rates of up to 391 percent on its loans, typically issued for two weeks.

Industry leader Advance America, based in Spartanburg, says it and others provide easy credit to households facing financial emergencies.

Reach DuPlessis at (803) 771-8305.