Bolton: The payday way

Associate EditorOctober 20, 2010 

IT’S HARDLY A coincidence that payday lenders who won big when Rep. Nikki Haley’s subcommittee helped torpedo a strong anti-payday lending bill in 2008 later donated to a hospital foundation the Lexington County Republican was raising funds for.

Quite simply, that’s the payday way.

Payday lenders are notorious for giving liberally to community organizations and politicians’ campaigns in an effort to insulate themselves from criticism and curry favor. South Carolina knows that. For more than a decade, payday lenders used their deep pockets and a bevy of lawyers and lobbyists to prevent any change in perhaps the most lax law in the country, as they raked in tens of millions of dollars in fees each year from Palmetto State workers, among the poorest in the nation.

Considering that Rep. Haley was once a key player in the payday lending battle, it’s no surprise that the lenders donated money to the Lexington Medical Center Foundation, which she worked for as a fundraiser. Nor is it a shock that she received campaign cash from the legalized loan sharks.

As a House Labor, Commerce and Industry subcommittee chairman in 2008, Ms. Haley directed the debate over a Senate-passed bill that wouldn’t have banned the industry like it should but would have done wonders to help keep consumers from falling into a cycle of debt. Ms. Haley, whose subcommittee held at least six hearings, said at the time that she favored reform but that the industry needed to exist and that consumers shouldn’t be stripped of an option to get money when in need. “Our job is to not choose a side,” she said.

But every change the subcommittee proposed — as well as the way it operated — ultimately favored the lenders. When the panel couldn’t even advance the dismantled bill, fellow Republican Sen. John Hawkins accused Rep. Haley of trapping it in committee; he said she was looking out for payday lenders and not working people.

Ms. Haley never was for real reform that aided consumers. And, yes, she helped the payday lenders’ cause. But to be fair, she wasn’t the one who made the call to kill the effort; she just set the stage.

After she and her panel allowed the matter to linger, Labor, Commerce and Industry Chairman Harry Cato killed the legislation with three weeks left in the session; he said the sides were simply too far apart.

Not surprisingly, The Associated Press soon reported that Mr. Cato’s political action committee had taken $16,500 in donations from the payday lending industry; he told me the amount was more like $5,000 and declared that didn’t influence his decision.

That’s the payday way. The lenders spread contributions around without discrimination: They give to Republicans and Democrats, senators and representatives and constitutional officers. They may not be trying to buy votes, but they’re adept at using millions they’ve stripped from consumers to affect debate and shape public policy. Their money buys access to decision-makers that everyday citizens can’t get.

Their triple-digit interest rates haul in a fortune. Shelling out several million dollars in contributions to keep their racket going is merely the price of doing business.

As State staff writer John O’Connor reported, in an in-depth story that included details about Ms. Haley’s $110,000 fundraising job, the Lexington Medical Center Foundation raised thousands of dollars from the payday lending industry after Ms. Haley went to work there. Spartanburg-based Advance America, the nation’s largest payday lender, and Check Into Cash both contributed to the foundation; neither had done so before.

Payday lenders also gave to Ms. Haley’s campaigns. In 2007, she received $1,750 from payday lenders. She received at least $4,000 from payday lenders and their trade associations in 2008. Between June and August of this year, she received $7,000 from Advance America and $3,500 from Check Into Cash to assist her in the governor’s race.

Over the years, the lenders have plied the campaign coffers of lawmakers, statewide officials, leadership PACs and party committees with cash. They gave more than $100,000 in political donations in 2008, an election year for the entire Legislature. About $180,000 more was spent in the last half of 2008 on lobbyists.

Between 2000 and 2006, payday lenders and other predatory businesses gave $575,000 to S.C. candidates for legislative and statewide offices and party committees, according to a 2008 report by the nonpartisan National Institute on Money in State Politics, which tracks contributions in all 50 states.

It’s likely that most of these officials didn’t ask for the contributions. But they shouldn’t have accepted hard-earned money that was stripped from vulnerable consumers. Would-be governor Nikki Haley and all others who have accepted donations should return the money or explain why they continue to take it.

Her opponent, Vincent Sheheen, has come under fire for being one of the attorneys expected to split a $1 million pot in a recently settled lawsuit against payday lenders. But that criticism is much ado about nothing. He and Mr. Hawkins were merely asking the courts to enforce the meager laws the Legislature already had written when they brought that initial lawsuit. Our editorial board did object when other lawyers filed a second suit that enlisted the aid of 11 more legislators. Our biggest concern was that it could endanger lawmakers’ ability to pass substantive legislation, by raising suspicions about their every word and vote. None of that materialized, and a law eventually was passed, albeit an industry-friendly one.

That new law went into effect in January, but the payday lending debate is hardly over. Some lawmakers and advocates are monitoring the situation to see if any appreciable progress is made. If not, they could push for more changes.

How would a Gov. Haley or Gov. Sheheen respond? I’m pretty sure I know. Do you?

Reach Mr. Bolton at (803) 771-8631 or wbolton@thestate.com.

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