Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 23, 1994 TAG: 9402230154
SECTION: BUSINESS PAGE: C-1 EDITION: METRO
SOURCE: By Bonnie V. Winston staff writer
DATELINE: RICHMOND LENGTH: Medium
Susan Berkowitz, co-director of the South Carolina Legal Services Association, said her state's law removing the limit "has adversely affected low-income persons in our state and has caused many abusive and unconscionable practices in the area of consumer finance loans."
A similar bill has cleared the Virginia Senate and was being considered Tuesday by the House Corporations, Insurance and Banking Committee. The committee delayed a vote until Thursday.
While some proponents praised it Tuesday as a boon to economic development - it would spur small loan companies to open scores of new offices in Virginia, one lobbyist argued - opponents called the bill little more that an attempt to legalize loan-sharking.
"A lot of our people are on limited incomes," said Mary Hale Madge, a lobbyist for the Virginia chapter of the American Association of Retired Persons.
A serious illness or a suddenly broken furnace can send the elderly running to finance companies because banks have turned them down, Madge said. "[The elderly] are the ones who are going to be devastated by it," she said.
Sidney Bailey, Virginia's banking commissioner, said his inquiry into South Carolina's experience turned up a high of 85 percent interest charged by one company on a $100 to $200 loan made for six months.
That had some committee members drawing their breath.
David Rubenstein, executive director of the Virginia Poverty Law Center, said his study turned up a 240 annual percentage rate on a finance company loan made in Utah, which also has no limits.
He predicted that loan default rates and bankruptcies would skyrocket in Virginia if the bill becomes law.
by CNB