Payday Lending Debate Eases in South Carolina

Or is it temporarily on the back burner?

Ongoing legislative debates around the country concerning payday loans were exemplified yesterday in the South Carolina Senate. That state senate took a decisive step away from the tough payday lending reform it passed last year.  This may signal a willingness to ease up on payday lenders, or it may simply mean that lawmakers will wait until next year to impose regulations on the industry.

With a 27-14 vote, the South Carolina lawmakers rejected a bill passed by a similarly wide margin last year, limiting payday loans to the lesser of 25 percent of a borrower’s periodic income or $500, and imposing a seven-day cooling-off period between loans. The payday loan industry has said tying loan limits to a borrower’s income would put them out of business.

A setback for consumer advocates

Consumer advocates, who are concerned about borrowers who become trapped in the payday loan cycle, lamented the senate’s action. Advocates claim that payday lenders have 28 lobbyists in the state urging lawmakers to shun tough regulations on their $155 million-a-year business at the expense of low-income South Carolina workers.

“We were disappointed with vote, both the total, and with the individuals who decided to cast a vote against the low-income consumers of South Carolina,” said Sue Berkowitz, director of the Appleseed Legal Justice Center in Columbia. “This is proof [the payday lending industry has] a stronghold on the South Carolina General Assembly.”

A middle ground may be the solution

The lawmakers’ rejection of the bill is “an indication they don’t want to go that route,” said Republican Senator Wes Hayes who sponsored the senate amendment passed last year. Despite yesterday’s set-back, however, Hayes said he thinks the Senate is looking for “middle ground.” But Hayes also acknowledged that if a middle ground is not found soon, lawmakers may lose interest in the issue.