South Carolina legislators heard from supporters and opponents of the payday lending industry as a panel took up legislation that could impose new regulations.
"We can't simply pass a bill and call it reform," Sen. Joel Lourie, D-Columbia, said Wednesday. "It's got be comprehensive and it's got to protect consumers ... I think we've got to hold the industry accountable to the purpose that they allege to serve: lending money to people who have one-time or occasional emergencies when they need cash immediately."
Consumer advocates want to break a cycle of repeat borrowing that racks up fees at the center of the payday lending industry's profits.
Last month, the House passed a bill that does little to stop that.
It forces the industry to set up and pay for a database that will bar consumers from taking out more than a single loan at a time. The loans can be for a maximum of $600 and consumers would pay $15 for every $100 they borrow. But they could continue refinancing those loans and incur more fees. They could do that for 10 times with the two-week loans before a cooling off period that could be as little as a day. And lenders also would be required to offer extended payment plans.
Sen. Wes Hayes, R-Rock Hill and chairman of the Banking and Insurance Committee panel handling the bill, said he wants a break before a consumer can borrow a second time and he wants loans tied to income. Every consumer advocate group testifying Wednesday called for those and more _ for instance, lowering the fees charged.
Meanwhile, the lending industry brought out its homegrown allies on Wednesday. Spartanburg-based Advance America Cash Advance Centers Inc. is the industry's biggest player.
"I represent the payday lending capital of the world," said Sen. Glenn Reese, D-Spartanburg. He has seen one complaint about the industry in 19 years and linked problems to bad apples. "You've got rogues and renegades in every industry."
Reese wants more regulation of the industry, but said it's a key element in helping people in tough times pay bills for funerals and dental care.
The industry has spent nearly $300,000 during the past year on lobbyists and political donations, according an analysis of state Ethics Commission reports by The State newspaper of Columbia.
That intensified in the second half of 2008 as the Senate came within three votes of passing a bill that would have banned payday loans.
Former state Sen. Tommy Moore of Clearwater became the industry's top lobbyist after a failed 2006 bid for governor. He was in Columbia on Wednesday as senators took testimony on the bill and ate lunch afterward with other industry lobbyists.
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