Brent Finnegan -- August 10th, 2010
In 2007, Harrisonburg City Council passed a resolution asking General Assembly to cap payday loan interest rates at 36 percent. At tonight’s council meeting, members could vote to reiterate that request to Richmond.
Based on Jeff Mellott’s report in today’s Daily News-Record, it seems likely the resolution will pass with the current 2009-2010 council.
The debate on the issue has been whether government should intervene or let the marketplace decide the interest rates charged, said Vice Mayor Richard Baugh. Government must intervene, Baugh argues, because true marketplace forces are not at work in predatory payday lending transactions.
“How much free negotiation are you having in those situations? The suspicion is that what you really have is very desperate people that are being taken advantage of here,” he said.
A little background:
All sorts of proposals to regulate the payday lending industry in Virginia have been introduced in General Assembly over the past several years, most of which died in committee. In 2008, lawmakers limited the number of payday loans a borrower could take at one time, but lenders found ways around the regulation by offering “open end credit” products. Lawmakers eventually closed the loophole, but interest rates have still not been capped.