The June 16 letter critical of Del. Glenn Oder, saying he “has finally addressed the issue” of payday lender abuses, really misses the mark. HB940 passed in 2002 on a bipartisan vote of 73 to 27 and was signed by a Democratic governor. I know; I was the patron of that bill.
I sponsored it reluctantly and then only after a year of study and another year waiting for federal regulators to curb unsavory practices of out-of-state banks “renting” charters to storefront operations in Virginia. These lenders charged as much as $20 per $100 borrowed, allowed unlimited rollovers (renewing each payday and requiring another advance payment), so that borrowers unable to repay the loans found themselves in financial trouble. Virginia’s Bureau of Financial Institutions has no jurisdiction over federally chartered institutions, and the federal government continued to be unresponsive.
An alternative was to establish a state-regulated system with lower rates ($15 per $100), limit each loan to $500 and prohibit rollovers. It took only a year of unimagined proliferation to realize what a colossal mistake it had been. Legalization gave the industry the license, the “respectability” it wanted. The flood gates were opened.
During the next five years I attempted repeal, Del. Oder attempted repeal, and many legislators tried diligently to reverse this misguided policy with its unintended results.
Del. Oder deserves full credit for his unflagging determination to gain approval of a formula that, while payday lending continues, it no longer attracts the prurient and disreputable interests that caused so much injury to an unsuspecting public. Because of his legislation, 35 percent of the payday businesses in Virginia have turned in their licenses and more are expected to leave the state by year’s end.
Appropriately, Del. Oder was recognized by the Virginia Interfaith Center in 2008 for his work to pass significant regulatory reform to break the cycle of debt created by payday lenders.
Harvey B. Morgan
Virginia House of Delegates
Middlesex
Copyright © 2009, Newport News, Va., Daily Press
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