Financial institutions

Payday Lender Closes Virginia Operations

As we posted in yesterday's News Stand, the Richmond Times-Dispatch reported that one of the largest payday lending groups, Check 'n Go, is closing up shop and leaving Virginia. While we would normally frown on the loss of business in our Commonwealth, the predatory lending institutions like this bring no benefit to the citizens of Virginia, and we're glad to see them go. Last year we were proud to work along side a diverse coalition of organizations, including the U.S. Military and the Better Business Bureau, that sought to limit the interest rates payday lenders charge to the same rates, by law, other financial institutions, may charge, and level the playing field. The incredibly high interest rates payday lenders charged trapped Virginians into cycles of debt and put families at risk. Though we were unsuccessful in capping the rate, the General Assembly did approve several restrictions, such as the number of loans an individual can have and remedies for those caught in the debt trap.

While not thrilled with the outcome, it was an incremental step in the right direction. This year, the General Assembly further restricted these lenders after they sought to side-step last year's law (The Family Foundation did not take a position on the issue this year.) Along with the declining economy, where joblessness continues to increase, few people are spending beyond their means. Combined with the new restrictions, payday lenders are finding fewer victims.

One comment from a payday lender in the T-D article was revealing. W. Allen Jones, founder and chairman of Check Into Cash, of Cleveland, Tenn., said, "People will not overspend; they're not confident in their jobs."

Note that, according to this quote, payday lenders were counting on people overspending. Payday lenders were created to take advantage of people's irresponsibility or desperation. This is not a business model that the Commonwealth of Virginia should endorse. As bad as the recession is, at least the bright spot of a payday lender leaving Virginia, has come from it.

Transparency: Good For The Private Sector, Not Good For State Government?

A fellow blogger gave me these lines to use in committee testimony in favor of the spending transparency bills (SB 936 and HB 2285). Thus far, the way they have travelled the legislative ladder, testimony hasn't been needed. For the record, the borrowed lines are:

"Financial institutions and publicly traded stocks, by regulation, must make readily available to the public its investments and corporate spending. If it's required of Charles Schwab, it should be required of state government."

The point being that the regulators (government) have a different standard for themselves than those on whom they impose rules. Here's a glaring and fun example. In his constituent newsletter today, Senator John Watkins (R-10, Midlothian) touts his commending resolution (SJ 394) to the crew and company of the summer 2008 HBO massive hit special event series John Adams (see our review here), much of which was filmed in central Virginia and Colonial Williamsburg. Among the reasons Senator Watkins wants to thank the crew is for the amount of money it spent in the Commonwealth:

"I previously mentioned my commending resolution to the crew of the John Adams HBO production. ... Filming a movie in Virginia is good for Virginia. For example, the John Adams mini-series spent $81,775,102 in Virginia. A few examples of how this money was spent: 

Technicians, Productions Assistants, Hired in Virginia: $9,025,750

Equipment Rental: $2,412,814

Wardrobe: $1,903,678

Car and Truck Rental: $1,141,053

Construction Supplies: $3,634,900."

Which is just great for everyone involved. But it begs the question: If we can get this kind of info out of a company doing temporary business in Virginia, why can't we get our own state government's expenditures? Stay vigilant. Improved transparency is on the way, but anything can happen. I'm keeping my testimony at the ready.