Alabama has more title loan lenders per capita than any other state. According to a recent study cited in the Alabama Political Reporter (www.alreporter.com), Alabama has four times as many payday lending locations as it has McDonald's.
Alabama isn't a poor state because of payday/title lenders. More likely, payday lenders flock to Alabama because it's a poor state, and poor is their customer base. But this kind of "business" certainly doesn't help. According to the Center for Responsible Lending, the average title loan is about $950, and is renewed an average of eight times, accruing more than $2,100 in interest. Do these borrowers need to make better choices? Of course. But that's one of the problems with being poor: Choices are limited, and the alternatives can be vicious.
Despite widespread support (62 percent in a recent poll) for reining in the usurious rates these lenders charge on short-term loans -- an annual percentage rate equivalent of between 300 and 400 percent (no, that's not a typo) -- legislation to do just that doesn't seem to be going anywhere.
HB406 is hardly a radical bill. It would cap the APR on short-term loans at 36 percent, a figure that would make even the worst credit-card profiteers drool. Even on Goat Hill, where loud cries of "Anti-business! Anti-business!" echo through the halls whenever proposed legislation threatens the profits of favored constituencies, nobody has yet argued (in public, at least) that such a cap is a serious threat to free-enterprise capitalism.
So what's bottling up this overdue reform?
Here's a hint: According to Alabama Political Reporter's Bill Britt, lawmakers of both parties have taken "hundreds of thousands of dollars from title lenders, payday lenders and check cashing businesses over the last three years."
Prominent among the beneficiaries of this largess, sad to say, are members of the same House Financial Services Committee that has sent HB406 into political limbo. Even sadder to say, the most prominent of all is the committee's chairman, Lesley Vance of Phenix City, who has accepted contributions from Select Management Resources, Cash America, Checks into Cash of Alabama, Advance America, Alabama Lenders PAC, TitleMax and Checksmart in the last few months alone. (A Feb. 12 Associated Press story reported Vance as saying he did not remember any such contributions and would have to check his records.)
This is politics at rock bottom, a case of conscience-impaired toadying to a scuzzy special interest -- "interest" being the operative word --with only the feeblest pretense of concern for the public good. (More than half the House members signed on as co-sponsors of HB406, which most surely knew would be scuttled. So add a generous dollop of pure hypocrisy to this noxious mix.)
The good news: The House on Thursday passed the latest version of a Ten Commandments bill. So if you don't think the Christian spirit is alive and well in Alabama politics, take that.