Originally created 03/07/03

House lending measure passes

ATLANTA - A predatory-lending bill criticized as weak by victim advocates cleared the Senate on Thursday, after an aggressive lobbying effort by Gov. Sonny Perdue.

The Senate voted 29-26 to agree with a bill, already passed by the House, aimed at correcting flaws in last year's anti-predatory-lending law.

Led by Banks and Banking Committee Chairman Don Cheeks, R-Augusta, senators had passed their own version, which advocates considered tougher on lenders who target elderly and unsophisticated borrowers.

But at the urging of Mr. Perdue, a Republican, Mr. Cheeks' GOP colleagues changed their position Thursday, voting largely along party lines for the House version.

"The gentleman on the second floor (of the Capitol) is making calls," said Mr. Cheeks, referring to the location of the governor's office. "I thought those days were over, but they're not. Same game, different day."

During last fall's gubernatorial campaign, Mr. Perdue accused Democratic incumbent Roy Barnes of being heavy-handed in his bids for legislative support.

Mr. Cheeks is a former Democrat who switched parties, at the urging of Mr. Perdue, after November's elections. His comments Thursday marked the first time a GOP lawmaker has publicly disagreed with Mr. Perdue - Georgia's first Republican governor since Reconstruction.

During a series of passionate speeches, Mr. Cheeks argued that passing the House version of the bill would, in effect, be caving in to banking industry lobbyists, who favored it over his plan.

He said the plan would make Georgians vulnerable to misleading loans that, in some cases, cause them to lose their homes when rates become too high.

"If I were to vote to agree with that garbage that came over here (from the House) - my conscience would hurt me so bad that I'd probably be scared to go to sleep," Mr. Cheeks said.

But the supporters of the plan said last year's bill went too far and hurt honest lenders trying to work in Georgia.

Shortly after the law took effect in October, three firms that evaluate investments stopped recommending that investors put money into Georgia mortgages, effectively halting lending to borrowers with the worst credit ratings. The rating agencies warned that the bill's lawsuit provisions were too risky for investors.

"When we start saying that we're going to stop doing loans that are good loans, the pendulum has swung a little bit too far," said Sen. Don Balfour, R-Snellville.

Having passed both chambers of the Legislature, the bill now goes to Mr. Perdue for his signature.


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