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Gilmore Blames Warner for Payday Loan Problems

Anita Kumar

Former governor James S. Gilmore (R) praised the House of Delegates today for their efforts to stiffen regulations on payday lenders while taking a not-so-subtle jab at his potential rivial in this year's U.S. Senate race, former governor Mark R. Warner (D).

"It is no secret that payday lending stores opened under the leadership of Mark Warner and the bill he signed into law,'' Gilmore said in a statement. "Their loans are deceptive and they should at a minimum be held to the same standards as other small-loan lenders operating in Virginia. Mark Warner's decision to adopt this policy was wrong and ultimately the people of Virginia have rejected it."

The legislature has been struggling for years to find a way to further regulate the industry whose customers take out loans against a paycheck.

It passed the Payday Loan Act in 2002 to license and regulate the industry, which Warner signed into law. But critics say the industry has exploded, leaving thousands of Virginians in a cycle of debt they cannot escape because of the high interest rates.

"Mark Warner's decision to adopt this policy was wrong and ultimately the people of Virginia have rejected it," Gilmore said.

Kevin Hall, a Warner spokesman, noted that the bill passed in 2002 with overwhelming support among Republicans in the legislature. Warner also called for a study to measure the impact of the new law but the General Assembly rejected it on essentially a party-line vote, Hall said.

"Governor Warner is pleased to see the legislature moving forward on additional legislation and would be supportive of a cap that is fair to working people," Hall said.


By Anita Kumar  |  February 5, 2008; 5:57 PM ET
Categories:  Anita Kumar , Election 2008/U.S. Senate , General Assembly 2008 , James Gilmore III , Mark Warner  
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Comments

So Gilmore, how's the car tax doing?

Posted by: Timothy Watson | February 5, 2008 7:31 PM | Report abuse

why don't we just be good democrats and tax payday loans? add on an extra 4% and require that it be paid at a special tax office

Posted by: be progressive | February 5, 2008 8:00 PM | Report abuse

I like taxes

Posted by: Mark Warner | February 6, 2008 4:57 PM | Report abuse

Thank God for people like Mark Warner who was only thinking about helping people in need when he signed the payday lending bill into law in 2002!

I think that if it was such a bad thing that it should have never gotten as far as it has. The interests are the same as they were when they were signed into law in 2002 so why whine about it now? That goes to show that there is a need for these stores!

Posted by: Sheri | February 27, 2008 3:21 PM | Report abuse

For those of you who value your freedom to make your own decisions in regard to your finances, and how you pay your bills, please read my new Blog, "Pay day loan mis-information".

There are people, including reputable news writers, who do not fully understand pay day loans, who are spreading mis-information.

Lawmakers, and politicians, are buying into this mis-information.

Now they want to protect us from ourselves.

It is important that we all understand a balance of all of the facts, before decisions are made, that effect something of such good use to so many good people.

Read the Blog as follows:

Pay Day Loan Mis-Information

Category: News and Politics

I recently read a Reuters news article, written by Nick Carey, Mar 23rd, 8:15pm ET, titled, "'Pay day' loans exacerbate housing crisis". I would like to clarify that there are some great inaccuracies and bias in this story that really must be pointed out.

I have had extensive experience with pay day loans, and, though I agree that the APR (annual percentage rate) is quite high, and people can get into trouble when they do not use these loans as they are designed to be used, this news report highly exhagerates the cost of a loan.
Read from the article as follows;

"A pay day loan is typically for a few hundred dollars, with a term of two weeks, and an interest rate as high as 800 percent. The average borrower ends up paying back $793 for a $325 loan, according to the Center."

This is not accurate! And there was much more inaccuracy than this in the article.
A pay day loan from a legitimate financial retailer generally costs about $15 for every $100 up to $500. This means that for a loan of $100 for 15 days the charge will be $15, totalling the loan at $115, which must be quoted as an APR of 365%. the actual total pay off for a $300 loan is $345.

And, by the way, I don't know where the the "anti" pay day loan "spinners" got their math from, but the 365% is an APR quote, which means that if you were to pay off and take out the same loan amount, over and over again, consecutively for 1 year, your fees would equal an APR of 365%. It does not compound, or whatever "voodoo" the spinners are trying to sell to the public opinion about pay day loans.

In reality it is only a fee that is being paid, not interest. However, government regulations require that it be quoted as interest, as an APR.

The only way that a short-term loan, a pay day loan, could build up to the absorbitent amount qouted in the news story, is if the loan were to be "rolled over", which is highly illegal in nearly every state that regulates these loans, so, thus, it would be highly improbable that there would be an average of borrowers that pay such amounts.

Pay day loans are for exactly what they are named. A short term small loan to be paid off by the next pay date of the borrower.

These loans have saved many a borrower, in a temporary financial pinch, to pay some bill(s), from much harsher penalties and costs that are incurred by banks and credit institutions if checks do not clear or payments are late.
The proper use of a pay day loan actually shows a personal and professional level of responsibility when it is used properly.

Yes, people do mis-use these loans, people get into trouble, people borrow beyond their means, and there are less than savory lendors who do not do what is right in order to avoid such disasters for their borrowers.

Pay day lendors must exercise great responsibility to protect borrowers and potential borrowers from becoming victims of borrowing beyond their means. That might even mean turning down a less than able and questionably qualified customer from borrowing.

I am disturbed to also hear lawmakers and politicians who are buying into mis-information and threaten the reasonable management and existence of a very useful and helpful service to many people.

Bruce - Washington

Posted by: Bruce | March 29, 2008 12:29 AM | Report abuse

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