Gov.'s office: Trip not tied to payday lending bill

February 1, 2011
Jerry Mitchell

Gov. Haley Barbour met with the nation's biggest payday lender when he traveled last week to South Carolina to seek support for a possible presidential run.

His visit with donors, community leaders and Republican activists included representatives of Advance America, based in Spartanburg, S.C. The group also had met with representatives from AT&T and Blue Cross and Blue Shield.

Asked about the meeting, spokesman Dan Turner replied, "Gov. Barbour spoke at various settings in South Carolina, and none of those meetings were indicative of support or opposition to any legislation currently under consideration in Mississippi. To single out one person in a group creates the false impression that Gov. Barbour met solely with that person, which, in this instance, was not the case."

Barbour's meeting comes as Mississippi lawmakers are negotiating how to reform the payday lending law, which expires in 2012.

Jamie Fulmer, vice president of public affairs for Advance America, said the gathering included a "small group of folks from the Republican community and business community that included major downtown employers. He was very well received."

Asked if Advance America plans to support Barbour if he runs for president, Fulmer replied, "We haven't even begun to look at any presidential campaign. We're obviously focused on the legislative battles."

Advance America operates in 31 states, including Mississippi, and there have been efforts to reform payday lending in many states. "We're trying to protect the jobs of our employees," Fulmer said.

The House and Senate each have passed legislation aimed at lowering the 572 percent equivalent interest rate.

Under current law, payday lenders can charge up to $21.95 on each $100 borrowed up to $400, including fees, for a loan that lasts till the next payday - one week, two weeks or a month.

Under the House version, fees would be cut from $21.95 to $20 for each $100 borrowed on loans up to $200. Loans between $201 and $500 would include the $21.95 fee, but customers would get at least 28 days to pay them back.

Under the Senate version, fees would be cut to $20 for each $100 borrowed on loans up to $300.

Loans between $301 and $500 would include the $21.95 fee, but customers would get at least 28 days for repayment.

After the Senate passed their version, House Banking Committee Chairman George Flaggs vowed to oppose it, calling it "anti-consumer" and saying the interest rate was higher than in the House version.

On Monday, Flaggs said he is willing to compromise at $250, but is still looking for a way to lower the interest rate. "I think the industry is about 95 percent together," he said. "They see I'm not getting off the $250."

Banking Commissioner John Allison predicted a compromise will come.
"The herd of cats are a little bit closer," he said. "If everybody agrees, it will go through and go to the governor."

If a compromise is reached, and the governor signs the bill, the changes would begin Jan. 1, 2012.

But two changes would take place immediately: giving a financial literacy brochure to each payday customer and voiding all loans Mississippians have made with unlicensed Internet lenders.

Jennifer Johnson, senior legislative counsel for the Center for Responsible Lending, said a huge loophole remains in the House and Senate versions - no prohibition against loan splitting.

"If a borrower wants $400, it is in the payday lender's interest to write two loans for $200 each," she said. "This is the more expensive loan."

Even if loan splitting were barred, the legislation permits multiple loans, she said. "A borrower could have loans outstanding at four different lenders."

Johnson said Mississippi's proposed reform is hardly reform. For instance, a two-week loan for $100 under the Senate and House versions would require customers to pay the equivalent of a 521 percent interest rate, she said.