New SC Senate bill aimed at predatory lending practices heads to committee hearing
Beginning Thursday, the full State Senate Labor, Commerce, and Industry committee (LCI) will begin hearings on Senate Bill 910.
That’s a bill introduced by State Sen. Tom Davis (R-Beaufort) that seeks to limit how certain short-term lenders can solicit new and maintain existing borrowers.
In its present state, the bill would force lenders to perform reasonable analyses of borrower’s ability to repay a loan without the need to regularly renew it. It would also curb lenders’ marketing tactics to vulnerable borrowers, such as those who might not be mentally capable of understanding that products such as live checks (they initiate a, typically, high-interest loan when deposited into a bank) really are.
All but one of the five-member LCI subcommittee voted to advance the bill –State Sen. Wes Climer (R-Rock Hill). Climer, is a financial advisor at his family’s wealth management firm, says the bill, at present, is at best naïve and at worst, harmful.
“In the states that have pursued similar policies, Climer said Wednesday, “the rainbows and unicorns and sunshine that advocates of the legislation describe simply haven’t happened.”
Climer says he fears S-910 will only serve to cut off credit access for financially troubled borrowers.
But State Sen. Kevin Johnson (D-Manning) says Climer’s argument is the wrong one to have. Johnson says Climer’s concerns actually reveal deeper issues with wages and earnings in the state that perpetuate the need to borrow at high interest.
“Minimum wage in South Carolina is $7.25 an hour” he said Wednesday. “Nobody can live off that; and that may be the reason so many people need to rely on these types of financial institutions – because they don’t make enough money to make ends meet.”
In the absence of wage reform – for which Johnson has introduced bills in the State Senate – he says protecting vulnerable borrowers from predatory lending practices is paramount.
Climer says he supports stopping the practice of mailing unsolicited live checks to residents.
Representatives of the installment lending industry say they support the idea of mandating a recission period following a loan signing, to give borrowers time to back out of some loans before being on the hook for a high-interest product.