In an article in the Springfield News-Leader today, Representative Steve Helms is quoted as saying, "I think we split the baby as best we could." Which is apparently his incredibly bizarre and theologically questionable way to say "compromised," I guess.
In the article, Representative Helms lays out some thoughts about tweaking the regulations around predatory lending practices in the state. Among the ideas are
- Lowering the number of times a loan can be renewed from six to two,
- Creating conditional extended payment plans,
- Lowering the total amount of interest and fees that can be charged from 75% of the loan total to 35% of the loan total.
- Lowering the licensing fee for a payday loan store from $500 to $300.
Helms is quoted as saying that more regulation that this would put lenders out of business, eliminating a much-needed resource for people who need a short-term cash loan.
Of course, Representative Helms is repeating industry talking points, rather than working for the common good. His bill (HB 2657) may seem on the surface to make meaningful changes, but the reality is that such incremental adjustments will have very little impact. As our legislature continues to be influenced by the predatory lending industry, the working poor in our state continue to suffer.
Notably, North Carolina has enacted very strict regulations on short-term lending, capping the interest rate at 36%, for example. Yes, several companies went out of business as a result, namely companies who were preying on the poor and basing their business models on loan rollovers, exorbitant fees and penalties, and triple digit APRs. I am not mourning their loss. And today it is still possible to get a small, short-term loan in North Carolina. The companies that chose to comply with the regulations are in business.
Representative Helms says he wants to "split the baby" on this issue. He means he wants to both make the corporations happy and also protect people from their predatory practices. He is attempting to cite scripture in making this analogy.
Solomon didn’t split the baby, though. Compassion, love, and justice are crying out to save the baby's life. We must cap the rate; lives are depending on it. May our legislature display the wisdom necessary to do what is right.
HB 2657 (Helms' bill) was read on March 1st, got its second reading on the 5th, and was assigned to committee on the 7th. A well-greased machine.
HB 1541 (which I wrote about yesterday) caps the interest rate at 36%. It was prefiled on December 7, read on January 3rd, got its second reading on January 4th, and HAS YET TO BE ASSIGNED TO COMMITTEE.
What's the hold up, I wonder? I suppose it's that HB 1541 doesn't "split the baby," but rather does everything it can to keep the baby alive, and safe from the deadly cycle of the debt trap on which predatory lenders base their profit margins.