Payday lending reform is not likely this year

COLUMBIA --- A move to restrict payday lending appears headed for failure yet again in South Carolina, home to the industry's largest business.

Lawmakers said Wednesday the chances passing a compromise this year are slim, with just four days left on the legislative calendar.

But "there's a glimmer of hope," said Sen. Joel Lourie, D-Columbia, as back-and-forth discussions continue. "I truly believe both sides would like to see a bill pass. It's a question of how far both sides are willing to compromise. ... We keep nibbling at a compromise."

While neighboring Georgia and North Carolina have banned payday lending, South Carolina legislators seem unable to move forward with restrictions.

In South Carolina, lenders charge $15 for every $100 borrowed on a two-week loan, but there's no limit on outstanding loans. Opponents say people end up taking out another loan to pay for the one they can't pay off.

The bill up for debate in the Senate calls for a limit of $500 per loan and a two-day waiting period between loans. Like a House version passed in February, it limits borrowers to one loan at a time and creates an online database to report when a loan is made. Lenders must check it to ensure customers don't have outstanding loans elsewhere.

The industry's strongest opponents criticized the House bill as too weak, saying limiting loans to $600 and requiring a break in borrowing only after 10 consecutive loans doesn't stop the cycle of debt. They hoped for a stronger version, such as what the Senate passed last year, tying loans to a borrower's income and requiring a one-week wait between loans. That proposal failed last week.

A spokesman for the industry's largest company, Spartanburg-based Advance America, said setting "arbitrary restrictions" -- such as loans tied to income -- would hurt the majority of borrowers who pay back the money responsibly.

Jamie Fulmer insists the industry also wants consumers to use the loans responsibly, and blame those who would prefer the industry's elimination in South Carolina for stymieing efforts.

Sue Berkowitz, the director of the South Carolina Appleseed Legal Justice Center, said such arguments are insulting, saying it's a matter of greed for an industry that preys on the poor.