Calling it “a moral stand, not a political campaign,” Virginia’s faith community last week called on legislators to support a 36 percent annual interest-rate cap on payday lenders.
The “Faithful Pledge” campaign seeks to involve churches of every denomination in pressuring lawmakers to repeal the 2002 law that allowed payday lenders to charge more than a 36 percent annual interest rate. Today, interest rates for the short-term loans reach nearly 400 percent.
“This campaign will ignite the faith community, and as you know, once the church is involved in an issue, there’s no turning back and there’s no making us stand down,” said Ann Rasmussen, policy director for the Virginia Interfaith Center for Public Policy.
The group established a Web site (www.faithfulpledge.org) and will circulate petitions in churches statewide. With all 140 legislative seats on the ballot this November, the group will target influential lawmakers who in the past have supported the industry.
“We want people to be talking about this in their communities. This shouldn’t be a conversation that’s just in the halls of the General Assembly or in academia,” said the Rev. C. Douglas Smith, the Interfaith Center’s executive director. “If we can educate people in congregations and raise awareness, and they in their civic lives raise the issues with candidates, that’s good, faithful democracy.”
In making the announcement Thursday in Richmond, Christian clergy accused payday lenders of preying on the weak and vulnerable, a “violation of the gospel of Jesus Christ.”
“We know that Jesus would never condone the charging of 390 percent interest,” said the Rev. Charles E. Swadley, pastor of Lakeside United Methodist Church in Richmond.
Mr. Smith said the group was not targeting those who use the loans or work in the state’s nearly 800 stores.
“We’re certainly not saying that everyone who works for this industry is hellbound,” Mr. Smith said. “I think we’re saying that the premise of the industry, the fact that their business model is based on trapping people in debt and charging them 390 percent interest, is immoral.”
Payday lenders have said an interest-rate cap would put them out of business; a 36 percent ceiling would prohibit them from charging more than $1.38 for each $100, two-week loan.
Currently, the industry charges $15 for every $100 loaned up to $500. The lender holds the customer’s check until his or her next payday, when the borrower either pays off the loan or the lender cashes the check.
Jamie Fulmer, investor relations director for Advance America, Cash Advance Centers Inc., the nation’s largest payday lender, said he was troubled by insinuations that payday loan customers or workers were sinners.
“For a long time, it seemed that somehow folks that needed to use this product and the folks who actually worked in our stores were basically not smart enough to understand the product,” Mr. Fulmer said. “Now that rhetoric has seemed to escalate to somehow this is immoral. These folks don’t deserve this.”
Efforts to place modest reforms on the payday lending industry died in the General Assembly earlier this year when negotiations broke off between industry representatives, consumer advocates and the governor in the session’s final hours.
Out of more than a dozen bills introduced to either reform the industry or repeal the law that allows it, the sole surviving legislation would have placed limits on the number of loans individuals could have at one time and required lenders to give overextended borrowers more time to pay.
“They talk about how unreasonable we were, but the industry was willing to accept several reasonable reforms that would have made a difference for consumers in the Commonwealth, but the critics were singularly focused on the 36 percent rate cap and as a result consumers got nothing,” Mr. Fulmer said.
A handful of states, including Maryland, North Carolina and West Virginia, cap payday interest rates at 36 percent. The District government initially approved a cap, with a final vote expected next month. Congress has also capped the annual interest rate on payday loans to military personnel at 36 percent.
No free tickets
The Frederick, Md., County Commissioners have approved a new ethics policy that bans county staff members from using free tickets for sporting events received from anyone with business pending before the county.
The change reflects a recent state ethics commission ruling intended to prevent a conflict of interest. The ruling allows elected officials to accept the free tickets if supplied as a courtesy, for example, if the officials is throwing the first pitch or cutting a ribbon.
Commissioner John L. “Lennie” Thompson Jr. observed that the county commissioners have received free tickets to the Frederick Keys’ opening game each year — then get requests to help fund renovations to the minor-league team’s stadium. He said organizations seeking money from the government should not be spending money to give tickets to the commissioners.
Maryland Gov. Martin O’Malley officially appointed former Delegate Nancy J. King to serve the rest of state Sen. Patrick J. Hogan’s term representing central Montgomery County.
Mr. Hogan, 45, elected to the Senate in 1994, resigned to become the chief lobbyist for the University System of Maryland. While in the General Assembly, he switched from the Republican to the Democratic Party.
Mrs. King, 57, elected to the House of Delegates in 2002, will complete his four-year term, which began this year.
The county Democratic Central Committee chose Mrs., King for the seat. Her name was then submitted to the governor to make the appointment official.
This column is based in part on wire service reports.