REPUBLICAN STATEHOUSE REPORT
Columbia, South Carolina
June 4, 2009
REASONABLE "PAYDAY" LENDING RULES VETOED
The governor received 65 final pieces of legislation last week, signing 42, allowing 13 to become law without his signature, and vetoing 10. Two of those vetoes were troubling to me and many of my colleagues.
The governor vetoed the hotly debated "payday lending" bill that many in the General Assembly believed was one of the most important issues we considered this year.
The payday lending reforms approved by legislators limit payday loans to one at a time, and established a database to keep track of the loans. The bill implemented several other protections for consumers, including giving the borrower the right to void the loan within 24 hours. These reforms were needed to end the practice of "flipping loans," by which consumers take out additional loans to pay off a loan they couldn't pay on time. This frequently leads to a vicious cycle where people can't break free of the high interest rates charged by these loans - trapping the borrowers.
We have been debating this bill for two years. The big issue was: What constitutes fair regulation of an industry that many believe unfairly takes advantage of people who can least afford it? And where is the line between responsible government regulation and an unfair intrusion into the free market?
Legislators on both sides, activists, and the payday lending industry reached a breakthrough last month, in an example of how difficult issues can be settled when all sides come together to work on a solution.
While the governor vetoed the bill, the biggest thing to consider is that these reasonable reforms were agreed to by the payday lending industry.
Payday landing is a $155 million-a-year industry in South Carolina, and started in our state in 1998. One of the biggest names in the industry, Advance America, is based in Spartanburg. Supporters of the industry say payday lending helps provide liquidity to many people who will not qualify for conventional bank loans. But that liquidity comes at a steep price, which the industry claims is justified because of the high risk of the loans.
As a conservative, I can see both sides of this issue, but government can, and does, provide consumer protections when companies are abusing the public. Government regulation can, and frequently does, go too far. That's why the industry was involved in these discussions.I believe the veto will be overridden, since the payday lending bill passed the House by a vote of 102-6 and the Senate 41-4.
The other veto I found troubling was the veto of the "Buy S.C." legislation. This bill requires that the state give preference in purchasing to companies based in South Carolina. I am sympathetic to the governor's argument that it could make some government services more expensive. However, I believe there is no harm in simply giving our local companies preference when we're spending our tax dollars - especially in a soft economy. In fact, it could give large contracts to in-state companies that could spur more employment. This is, at its essence, a jobs bill.
Other bills vetoed by the governor include the reforms to the state ports authority - an issue I wrote about several weeks ago.
The legislature will return on June 16th to consider overriding or sustaining the 10 vetoes issued by the governor.
