Interest rate cap bill squeaks by Crossover deadline; internet lending license fails

Feb. 13--Coming down to the wire on a critical legislative deadline, the state Senate approved re-regulating the small loan business while the House put on ice a measure that would let high interest rate internet lenders operate legally in Virginia.

The deadline Tuesday -- "Crossover Day" -- is when the House of Delegates and state Senate have to complete work on their bills before turning them over to the other body.

The Senate, in one of its final actions before the end of Crossover Day, approved a bill that sets an interest rate cap on consumer loans for more than $2,500.

The House left lie in a committee a measure that would have given internet lenders a license to operate here, but without being subject to the interest rate caps and other consumer protections in state law.

Without a license -- such as those that banks, credit unions, small loan companies, car title lenders or payday lenders have -- the state's basic 12 percent usury cap applies.

The bill that caps rates on installment loans to consumers -- the type of loans many people take out to buy items such as appliances, trailers or Sea-doos -- was a re-regulation requested by the lenders themselves and supported by consumer advocates and Attorney General Mark Herring.

That re-regulation extends the current cap of 36 percent on installment loans for less than $2,500 to apply to all installment loans up to $35,000, and says state consumer protection laws apply, said Jay Speer, executive director of the Virginia Poverty Law Center.

"I think the only people who'd oppose this are online lenders," Speer said.

Unlike licensed consumer finance companies, which make loans for fixed terms of up to 10 years with set monthly installments, internet lenders charge high rates, often don't bother with credit checks and at times structure credit and charge fees in ways that boost the principal owed.

"These internet lenders are a

Paul Nehlen, whose anti-Semitic tweets caused a stir in recent months, drew criticism again after tweeting an image of actress Meghan Markle photoshopped with the face of Cheddar Man, the dark-skinned man believed to be the first modern Briton. (Feb. 13, 2018)

Paul Nehlen, whose anti-Semitic tweets caused a stir in recent months, drew criticism again after tweeting an image of actress Meghan Markle photoshopped with the face of Cheddar Man, the dark-skinned man believed to be the first modern Briton. (Feb. 13, 2018)

President Trump's top intelligence advisor told senators Feb. 13 that he expects Russia to mount an operation to influence U.S. voters in the November 2018 election.

President Trump's top intelligence advisor told senators Feb. 13 that he expects Russia to mount an operation to influence U.S. voters in the November 2018 election.

n entirely different business" than the licensed consumer finance companies that make small installment loans, said the bill's sponsor, state Sen. Scott Surovell, D-Mount Vernon.

Last week, the attorney general's office settled a complaint that one internet lender, MoneyLion, had charged interest rates as high as 359 percent, when the company agreed to refund more than $2.7 million to 3,800 Virginians.

"One-hundred and fifty percent to 350 percent rates on loans above $2,500 are not reasonable under any situation," said Jeff Smith, president of the Virginia Financial Services Association, which represents loan companies.

The interest rate cap bill, Senate Bill 625, will now move to the House.

"This bill needs to get done," said Ward Scull, the Newport News moving company executive who has spearheaded grass-root efforts to control high interest rate predatory lending in Virginia for decades.

"We don't want to have to bring Sharky back to the floor of the House," he said, referring to the stuffed shark that former Newport News Del. Glenn Oder used to bring with him for moral support as he battled for tighter loan regulations.

In the House, meanwhile, a bill that would have allowed internet lenders to get licenses to operate in Virginia, but without being subject to the interest rate caps and other consumer protections state law provides for other loans, didn't meet Tuesday's deadline. It won't be acted on this year.

Scull said the Peninsula delegation, led by Del. David Yancey, R-Newport News, has continued with the local legislative tradition of pushing for tighter controls by urging Speaker of the House Kirk Cox, R-Colonial Heights, not to proceed with the internet lender bill.

On Tuesday, the House plowed through nearly 180 bills up for their final vote, and the Senate, more than 70.

Among the bills passing the House was one requiring Medicaid's adult recipients to work, if they are not disabled.

The House also approved a bill revising state regulation of electric utilities to allow the use of excess earnings to finance an ambitious, multibillion-dollar program to install solar and wind generating facilities and modernize their networks of wires and electrical equipment linking customers to power plants.

The House version was amended to include a ban on double recovery of the costs of those facilities, which the office of the attorney general and the State Corporation Commission said was a possibility under the bill's mechanism.

The state Senate version, passed last week, did not include that amendment, however. That means the House might decide to add its amendment to the Senate bill, when that measure is before it; or that the Senate might decide to take the amendment out when it considers the House bill. Any changes to either bill would have to be accepted and, if not, the measures would go to a conference committee to resolve any differences.

"We are pleased the bill has passed the House of Delegates -- and the Senate previously," Dominion spokesman David Botkins said. "We are still studying the effects of the amendment on the House bill."

The House also approved a bill to increase, from $200 to $500, the trigger at which larceny becomes a felony. The bill was a compromise worked out between Gov. Ralph Northam andCox.

The Senate approved Senate Majority Leader Thomas K. "Tommy" Norment Jr.'s proposal for a sales tax surcharge of 1 percentage point in Williamsburg, James City County and York County. Half the proceeds would be used to finance a tourism marketing effort, and half would go to the localities, said Norment, R-James City. In return, Williamsburg will roll back increases in its meals and hotel taxes and would eliminate a new admissions tax.

"This is unusual tax legislation," Norment said. "You're not just discussing increasing the sales tax, you're eliminating three taxes."

The Senate also approved a series of bills intended to broaden access to health care.

One, Senate Bill 266, would authorize new neonatal care units in Hampton Roads, Northern Virginia, Richmond and Roanoke, without having to secure a Certificate of Public Need from the state health department, a process critics say protects hospitals and keeps health-care costs high.

Another, Senate Bill 844, says managed care companies that want to make money running plans for Medicaid or state employees also have to offer Affordable Care Act coverage to individuals.

A third, Senate Bill 915, proposed a tax on hospitals to provide coverage through Medicaid for more people with serious mental illness, though its sponsor, state Sen. Siobhan S. Dunnavant, R-Henrico, said final word on the financing was in the hands of General Assembly money committees.

Ress can be reached by telephone at 757-247-4535

___

(c)2018 the Daily Press (Newport News, Va.)

Visit the Daily Press (Newport News, Va.) at www.dailypress.com

Distributed by Tribune Content Agency, LLC.