Two bills sponsored by Democratic Sens. John Miller and Mamie Locke as part of an effort to crack down on payday lenders in Virginia were voted out in subcommittee. The two legislators -- along with Del. David Yancey (R-Newport News), whose own proposal as shot down in the lower chamber -- have argued that the steep interest rates associated with payday loans are unfair and go against the spirit of regulations that Virginia's General Assembly placed on the industry several years ago.
Industry lobbyists and other legislators say there are enough protections in place and that more would drive borrowers toward even worse deals with unregulated lenders. Miller noted that the federal government caps interest rates at 36 percent on loans to members of the military and suggested that Virginia do the same for everyone. He said that many credit unions offer small, short-term loans to members and suggested that such programs could bridge the gaps if the state pushes harder against payday loans.
Payday loans often include fees and high interest rates that force borrowers to pay hundreds more on the small amounts they borrow, even after months of regular payments. "They trap people in the cycle of debt," Miller said. "That's not fair."