Payday lending bill is on hold

By JIM DuPLESSIS - jduplessis@thestate.com

Credit counselors and others testified for an hour Thursday before a House subcommittee about problems created by payday lending, but a bill to restrict the two-week, high-interest loans will have to wait for a vote.

About two weeks.

S.C. Rep. Harry Cato, R-Greenville, chairman of the House Commerce Committee, said his banking subcommittee has agreed to consider another bill next week and will return to the payday lending bill the following week.

Advocates of restrictions have said a delay could mean silent death for the bill, but Cato said he expects it will get a vote from his committee and go to the House floor before the session ends June 5.

“There’s plenty of time left,” Cato said.

The S.C. Senate passed the bill Feb. 19, and hearings have been held since March in the House Banking and Consumer Affairs subcommittee chaired by Rep. Nikki Haley, R-Lexington.

As it stands, the bill would limit borrowers to no more than one $600 loan from any lender, require a seven-day waiting period between loans and establish a state-monitored database to ensure lenders and borrowers are complying with the law.

On April 9, the subcommittee stripped the bill of a Senate provision that would have required lenders to limit the size of each loan to no more than 25 percent of a borrower’s gross income for the two weeks of the loan.

Further changes could come. Cato said the seven-day cooling-off period between loans is too long. “I’m wrestling with one or two days.”

One credit counselor who testified said desperation and fear lead many people to abandon reason and make bad financial decisions that bring them to her office for help, often when they are on the brink of losing their homes.

Reach DuPlessis at (803) 771-8305.