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Edition: Final Willie Green represents the industry when he calls for regulation of payday lending, an industry that is desperate to be re-authorized in the state (April 25 Point of View article "Regulate, don't ban, payday lending firms"). Green, president of the N.C. Check Cashers Association, is in no position to speak for the average North Carolina payday borrower, who ends up paying $800 to borrow $300. Predatory payday loans are designed to be difficult to pay off. If you can't pay off the $300 in two weeks, you either 1) pay bounced check fees and risk a civil lawsuit, or 2) refinance the loan and pay another 400 percent APR fee. Of course, most borrowers refinance the loan. As payday rolls around and they have less cash to spare, they must renew again, paying the $50 in interest because they can't afford to pay off the $300 loan. The test of any responsible small loan: will it benefit the borrower? A loan that solves a cash shortage would have at least a 90-day loan term and always be repayable in installments. Senate Bill 947, which Green praises, does not require this. A responsible law would prohibit the use of a personal check as collateral. SB 947 does not. And most important, any small loan law must stop "loan flipping." SB 947 does not. The state Senate must listen to the borrowers who have been burned by payday lending, as well as consumer credit counselors, civil rights leaders and military leaders who are seeking fair lending practices. The industry is the only voice calling for this false regulation. The rest of us want true reform.
Yolanda McGill Senior Policy Counsel Center for Responsible Lending Durham
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