Deeds, McAuliffe duel over payday lending
Olympia Meola
May 15, 2009
Jeff E. Schapiro on the Terry McAuliffe-Creigh Deeds hissing match:
Now its Deeds’ turn to attack McAuliffe the new-fashioned way: paid advertising—in this case, a radio commercial picking apart McAuliffe’s promise to drive off payday lenders and their kin.
Deeds last night announced he’s running an advertisment in the Richmond-Norfolk corridor—home to many trade unionists and African-Americans, both important Democratic constituencies—scolding McAuliffe for a perceived attack on fellow Democrats for not doing enough to rein in the high-cost, instant-loan industry.
“McAuliffe wants you to believe Warner, Kaine and Democrats in the legislature went easy on those payday-lending companies,“ says an announcer, referring to two governors—Mark Warner and Timothy Kaine. The spot goes on to accuse McAuliffe, a former bank chairman, of making millions in the credit-card business, which would be more heavily regulated under measures passed by Congress and backed by President Obama.
This afternoon, McAuliffe fired back. In a wrtitten-statement issued by press secretary Lis Smith, McAuliffe knocks down Deeds’ claims, including one that McAuliffe—a wealthy investor-businessman from McLean—amassed a fortune through the credit-card industry.
McAuliffe notes that he worked with the AFL-CIO on credit cards tailored to organized labor; that provided discounts and other services for cardholders. McAuliffe also takes a swipe at Deeds, noting that—as a legislator—he backed a measure in 1997 that made it easier for credit card companies and retailers to calculate interest on purchases made with plastic.
McAuliffe came out against payday lending and other fringe-credit businesses more than a month ago. Last week, he rolled out a radio commercial, also in the Richmond and Norfolk broadcast markets, vowing to close the state to payday, car-title and open-ended loans.
Deeds, a state senator from Bath County, and the third candidate in the June 9 Democratic primary, former Del. Brian Moran of Alexandria, have taken a similar stance. As legislators, they supported modest restrictions on payday loans. And Moran collected $25,000 in contributions from the industry.
This advertising duel spotlights the importance of blue-collar and black voters in the fast-approaching primary. It also is a reminder that, while a Republican-controlled General Assembly gave lenders the green light in 2002, a Democratic governor—Mark Warner, now a U.S. senator—signed into law the legislation that legalized payday lending in Virginia.
Payday loans is the worst form of debt any one could get into, because it becomes a cycle of debt that one can not get out of. The rates of interest are very high and since the loans are short term, the APR will make one shudder! With about 10% being standard, every 2 weeks, the interest is effectively 240% a year! So if some one making $1,000 a paycheck gets into the cycle of debt, he/she will be taking the loan every pay period, and paying it off with the next paycheck. Effectively, one pay check of part of it becomes a revolving line of credit and by year end, interest paid is about 240%. As a business, or line of credit, we pay about 4% APR now.
How can we allow the poorest of our voters stay trapped in this cycle of debt?
This impacts only a small percentage of our citizens, but it is a problem area that should not be ignored. It is only a matter of time before this grows and becomes a cancer our society will not be able to overcome.
It is great that McAuliffe has shown the courage to oppose the predatory payday lending. It is a pity that the other candidates do not oppose this cruel injustice on our fellow Virginians.
Jun. 2, 2009 at 09:34 PM
The Democrats cannot deny their involvement in helping and keeping payday lending around. Just like a blueberry stain on your shirt, the stain of complicity with the payday lenders won’t go away. So, stop trying to pretend the stain isn’t there, and get rid of the shirt. Stop telling us you are going to reform or crack down on payday lending. Just tell us you are going to reinstate our usury cap that has been in place on small loans for years—36%.
May. 16, 2009 at 06:18 AM
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