March 8, 2007
Anderson Independent Mail
Heidi Cenac
 
Genevieve Brown, head of Anderson's AARP chapter, said Anderson used to be known for its restaurants.

"Everyday it's another restaurant, but payday lenders have outrun the restaurants," Ms. Brown said.

The industry's influx has Ms. Brown and other Anderson residents concerned. About 75 people attended Thursday night's town hall meeting at the Anderson County Library to hear consumer advocates explain the payday lending industry's dangers.

The meeting, sponsored by AARP and the Community Housing Resource Board, was last in a series of gatherings organizers hope will rally support for legislation in the State House. The legislation limits the annual percentage rate payday lenders can charge to 36 percent and restricts the number of loans residents can take out.

"We want to make sure people are financially secure as they grow older," said Teresa Arnold, legislative director for AARP in South Carolina.

Payday lenders charged $150 million in fees in South Carolina alone, on more than 4.3 million loans in 2004 -- more loans than there are people in South Carolina. Speakers at the meeting say that's possible because the current payday-lending model encourages residents to take out multiple loans and create a debt cycle.

Under South Carolina law, payday lenders can advance their clients up to $300 for up to $15 per $100 borrowed. The typical payday loan is for two weeks, giving it a 390 percent annual percentage rate.

"We all worked on predatory mortgage lending (legislation) because we saw the value of their homes being stripped away," said Sue Berkowitz, director of the AppleseedLegal Justice Center in Columbia. "This is no better."

From July 2005 to June 2006, 52 new payday-lending locations opened in South Carolina. There are approximately 1,120 payday loan offices in the state and at least 44 in Anderson County, according to AARP.

Those in the industry argue that the rapid growth is the result of consumer satisfaction with their product. If paid on time, the fee for a one-time payday loan is cheaper than bouncing a check and easier than taking out a loan from a bank, lenders say.

Ms. Berkowitz agrees that residents should have access to small, emergency loans, but said she wants to encourage people to use "a positive lending model," such as a credit union.

Jim Nunamaker, director of governmental affairs for the South Carolina Credit Union League, said credit unions have become easier to join and most will make loans as small as $300 with no collateral. The non-profit financial institutions also provide financial counseling to members.

Credit unions are heavily regulated; federally charted institutions cannot charge more than 18 percent APR on a loan and most state-chartered institutions don't charge more than 19 percent, Mr. Nunamaker said.

Payday lending legislation in the House has been in committee since its first reading Jan. 17. Ms. Berkowitz said Rep. Harry Cato, R-Travelers Rest, the committee's chairman, is the key to seeing the legislation reach a vote.

Rep. Michael Thompson, R-Anderson, the committee's second vice chairman, has been receptive to their concerns with the industry, she said.

Anderson resident Joe Davenport encouraged those at the meeting to share what they learned at the meeting and to contact their representatives. He said the secret to getting legislation passed is letters and signatures.

"Nothing scares a politician like numbers," Mr. Davenport said.