Draft on payday rules loses a provision
In 2006, Congress passed a bill, backed by Senator Richard J. Durbin, Democrat of Illinois, to limit the annual percentage of loans to active service members and their families to 36 percent, a move that primarily affected payday lenders. In 2008 and 2009, Mr Durbin suggested extending this limit to all borrowers.
The industry says a cap would be devastating to its profitability.
On Monday, the nation’s largest payday lender, Advance America of Spartanburg, SC, said in a filing with the Securities and Exchange Commission that “any federal law that would impose a national APR limit of 36 percent on our services, if passed probably our ability to continue our current operations. “
According to the file, the industry began expanding significantly in the late 1990s due to the low cost of entry and relatively loose government regulations. “However, due to market saturation and federal and state legislative and regulatory challenges, we believe that the number of centers in the United States in the cash advance services industry has largely stopped growing,” said Advance America.
Mr. Corker’s campaign received $ 6,500 in the past two years from Advance America founder George D. Johnson Jr., its executive director, William M. Webster IV, and his political action committee.
A report last year by Citizens for Responsibility and Ethics in Washington, an impartial watchdog group, found the payday industry increased lobbying spending from $ 730,000 in 2005 to $ 2.1 million in 2008 Has.
Steven Schlein, a spokesman for the Community Financial Services Association, said the industry should not be drawn into regulatory reform.
“The banks created the financial crisis and they are spending millions and millions to avoid tighter regulation while shoving the consumer credit industry under the roof,” he said. “They are trying to draw attention to us.”