In the spirit and purpose of Off K Street to provide commentary and analysis on how politics and issues DIRECTLY AFFECT PEOPLE, this exemplifies how grassroots pressure in a non-partisan way can affect real change. During my time working in the non-partisan world on this issue, we (myself and many other social and economic justice minded people, groups, and organization) pressed Democrats and Republicans alike to take action on this issue of economic injustice. Two things have happened this year that I can say, have moved this issue in the direction of positive change that makes a CONCRETE IMPROVEMENT in the lives of thousands of Virginians.
The first is the closing of the open-ended credit loophole that Payday Lenders were exploiting (tied very closely to the one Car Title Lenders have utilized) after the compromise legislation passed the 2008 General Assembly. This was legislation that they (the Consumer Credit Industry) had a seat a the table and were full part of shaping the legislation. After it was passed and signed into law, they arrogantly chose to exploit the loophole and offer open-ended lines of credit on loans less than $1,000. While that might seem like a positive option, the problem was they were still charging interest rates comparable to the 396% they charged with their original products.
The second is today's announcement that the Commonwealth of Virginia will at least help out their state employees that are members of the Virginia Credit Union to weather these tough economic times. The 25% interest rate is still high, but it is less than the 36% cap that was sought by grassroots groups and it is structured to benefit paying off the loan early, thus paying a lower interest rate the sooner the loan is paid in full. Just imagine if car loans and mortgages were structure this same way? There would be virtually no consumer debt or national debt for that matter. Financing that rewards early pay-off. What a novel idea!!!
At any rate, this is another blow to the Payday Lending Industry. Next up, are Car Title Lenders who charge similar interest rates against the assessed value of a vehicle. Here's what most borrowers don't understand. They are using their vehicle as collateral, which means it's a secured loan. Secured loans can only be assessed a maximum 36% interest rate under Virginia's Consumer Finance Act. For some reason, Car Title Lenders are not obligated to the regulator parameters of the Act. State Senator Richard "Dick" Saslaw has put the Car Title Lenders on notice that they will be getting a thorough examination during the 2010 General Assembly Session.