Watching only: Bankers monitoring but staying out of payday lending law debate

January 13, 2011

Banking & Finance

By Ted Carter
The Mississippi Bankers Association is staying out of the tussle going on at the Capitol over renewal of the state’s payday-lending law.
No upside to entering a fray in which you have little or no stakes, says Mac Deaver, association president.
While the MBA does not have a position on whether to renew, reform or repeal the lending law, “We are watching it very closely,” Deaver said.
“We’ve got this one under the monitor column.”
State Rep. George Flaggs, chairman of the House Banking & Finance Committee, said bankers around the state have told him they are staying on the sidelines in the debate over legislation he has introduced to extend the payday lending law for another seven years. The law expires in 2012.
Flaggs’ bill would increase the transaction limit to $500 from $400 but would force the lenders to give borrowers 28 days to repay the loans. The 28-day rule would put small lenders in rural areas out of business, an industry spokesman says.
Paheadra B. Robinson, director of consumer protection for the Mississippi Center for Justice, said several banks, including Trustmark, BankPlus and BancorpSouth Bank have endorsed reform of the payday lending law. Reformers are seeking to establish a 36 percent cap on interest rates on payday loans.
However, spokeswomen for two of the banks – Trustmark and BankPlus — say their institutions have not taken a position on the issue. BankcorpSouth’s spokesman is checking with executives of his bank.

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