Payday lending an endangered species in South Carolina?

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By Johnathan Ryan

The S.C. Legislature took no action to further regulate payday lending in the legislative session that ended last week, but state Sen. Greg Gregory, R-Lancaster, thinks payday lending is now set up for a fall when the Legislature convenes in 2009.

The Legislature considered tighter regulations of the industry this year, but procedural moves buried the bill late in the legislative session.

A Senate bill would require lenders to make just one payday loan at a time, a waiting period between a second loan and a database for companies to check before making a loan. It also called for limiting payday loans to 25 percent of one's two-week income.

The Senate included those regulations on a bill on prepaid funeral loans.

Arguing that there is no comparison between a prepaid funeral loan bill and payday lending, House Speaker Bobby Harrell sent the bill to the Labor, Commerce and Industry Committee late last month.

Rep. Jimmy Neal, D-Kershaw, said that move killed the bill for the year. Neal supports greater regulation of payday lenders.

Gregory said the industry may have created more of threat for itself next session with the actions taken late in this session.

It's likely there will be a strong movement in the Senate to outright ban it next year, and that it will be a front-burner issue then, Gregory said.

"The industry probably did themselves a disservice by trying to block it this year," he said.

Gregory supports heavier regulation of the industry, but not an outright ban on it.

He believes the loans help some people.

He also believes they make sense, due to lending realities.

Banks don't grant the small loans that payday lenders offer, and small loan lenders would have to charge a high interest rate to cover at least the cost of processing the loan, since the loans are supposed to be paid off in a short period, he said.

Gov. Mark Sanford has also indicated that payday lending is necessary for some in certain financial situations.

Gregory, who is stepping down from the Senate this year, argues the Senate's legislation was a good "middle ground."

"It would have curbed some of the abuses," Gregory said.

Ted Sowell, a member of the S.C. Silver-Haired Legislature and Heath Springs Town Council member, did not favor the Senate bill, however.

The Silver-Haired Legislature wants the practice banned. The group, which lobbies the state Legislature for new legislation each session, argues that seniors are a group especially hurt by payday lenders.

"It seems the only way to control it is to do away with it altogether," He said.

Contact reporter Johnathan Ryan at jryan@thelancasternews.com or (803) 416-8416