For those of you who don't live in Virginia, the key piece of background information here is that the Virginia House of Delegates is generally controlled by the lunatic right. These are people who aren't sure that contraception should be legal, who would rather see all of Northern Virginia permanently frozen into gridlock than raise taxes to build roads, who think that preschool for poor kids is a socialist plot. The Senate is usually more reasonable, even before the Democrats took back control in the last election.
So, I'm more than a little bit shocked to find myself supporting the payday lending reform bill adopted by the House of Delegates, rather than the sham reform being sponsored by Senate Majority Leader Dick Saslaw. It's not a perfect bill --while it theoretically imposes a 36 percent cap on interest rates, it allows for fees to be charged on top of that, which drives the real cost of lending far higher. But it would be a good start, and would help prevent people from getting caught into an endless cycle of taking out another loan to pay off the first one.
By contrast, the folks who have been fighting payday loans -- including the AARP, the AFL-CIO, the NAACP, Voices for Virginia Children, and the Virginia Poverty Law Center -- say that the Senate bill could be worse than nothing. It's hard not to conclude that campaign contributions are driving policy.
As previously discussed here, there's a real need for low-cost small dollar loans for people without great credit. Even usurious rates can be worthwhile if the choice is losing your job when your car breaks down. I'm not sure what the best solution is. But a study from North Carolina -- which banned payday loans a couple of years ago -- shows that low-income people aren't reporting hardship as a result of the ban.
Last time I posted about banking, reader Dave S. posted this link for the Predatory Lending Association. I assume that anyone who spends a minute on that site will figure out that it's a parody put up by the opponents of payday lending. By contrast, I'm not sure that it's immediately clear that the folks who were advertising on CNN during the coverage of the Potomac Primary results, with the URL "www.ReformPaydayVA.com" is the payday lending industry.