Rod Scott: An opportunity for leadership

March 3, 2014 

Representative Lesley Vance, who represents Lee and Russell counties, is chairman of the Financial Services Committee in the Alabama House of Representatives. Rep. Vance and other members of the committee have the opportunity to be leaders in Alabama and the legislature, by moving forward important legislation that will protect some of the state's most vulnerable citizens -- working mothers, veterans, members of the military, senior citizens, and many more -- as well as helping to grow Alabama's economy through common-sense reforms to the unregulated car title lending industry.

This legislation, HB406, has widespread support across party, religious and ideological lines. Not only do the majority of Alabamians support this legislation, but so do the majority of my colleagues. Over half of the Alabama House of Representatives, both Republicans and Democrats, have signed on as sponsors of this important legislation.

HB406 enjoys this extensive support because these reforms make sense for our citizens and state. Every day this industry continues unregulated, more citizens are victimized and end up buried in insurmountable debt and our communities continue to suffer as a result of the stifling impact on their local economies.

In the absence of legislation, 18 municipalities, including several of the state's largest cities, have stepped in to try to curb the damage being done to their citizens and local economies by passing local ordinances and moratoriums. Many of their resolutions have also publicly called on us to step up and provide reform at the state level.

Without basic regulations, this industry is trapping thousands of Alabamians a year in a nearly inescapable cycle of debt and blocking economic progress across the state. Car title lenders and their immoral 300% interest rates are taking money out of the pockets of working Alabamians and from our local economies. Their storefronts increase blight and scare away investment from legitimate businesses.

This bill will address these issues through remedying the outlandish 300 percent interest rate regularly charged for auto title loans. Instead, it would put in place a more reasonable interest rate, at the most 36 percent APR, which ought to be plenty of profit on a loan that is already secured by a tangible thing of value -- the family car.

Under current Alabama law, if a borrower doesn't repay the loan, a lender can repossess the pawned vehicle and sell it for a profit, sometimes earning thousands of dollars more than the amount loaned. Alabama has always appreciated the value of hard work. But we don't appreciate a financial windfall gained by taking advantage of someone who needs money in a desperate time. Our bill will return that surplus money to the borrower.

These measures are common-sense reforms that we must move forward. The time is now. The people of Alabama are counting on us to get this done this year. And I'm counting on Rep. Vance, his leadership and my other colleagues on the Committee on Financial Services to stand up and do the right thing and send this legislation to the full legislature. With unprecedented bipartisan support, HB406 deserves a vote.

Rep. Rod Scott, D-Fairfield, is serving his second term in the Alabama House of Representatives. He holds a B.A. in economics from Yale University and an MBA from Dartmouth, and is a professor at Miles College.

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