Lawmakers in Richmond are trying to crack down on high-interest loans. But, advocates against predatory lending are concerned about new loopholes that might be created in the process.
Republicans weren’t really interested in cracking down on car-title lenders that charged 200% interest or online lenders that charged 800% interest. But now that Democrats are in power, they’re moving forward with a bill they call the Fairness in Lending Act, which caps interest at 36%.
“This bill was brought forward because Virginia has some of the weakest laws in the country for payday and title loans," says Senator Maime Locke of Hampon, who introduced the bill. "The same lenders are charging Virginians three times more than what they charge people in other states. This is unacceptable, and Virginia consumers deserve better.”
Her bill passed the Senate and is now on its way to the House, where a similar bill has already been approved. But advocates are concerned about another bill working its way through the Senate.
Jay Speer at the Virginia Poverty Law Center says a bill introduced by Senator Lynwood Lewis of Accomack would be problematic:
“This opens a new loophole, which means that it will nullify all the time and energy that we spent on these other bills closing the loopholes by opening a new one," Speer explains. "All the bad lenders are just going to go to this new loophole and make their loans there.”
The Senate will take up that bill today – its last day of business before the final deadline for sending bills over to the House of Delegates, a high-stakes debate in the closing hours before crossover.