There’s word from the General Assembly that the consumer finance industry is unhappy with state law designed to help protect active members of the military from exploitation. In case you’ve forgotten, the consumer finance industry runs more than 400 storefront shops throughout North Carolina that make loans featuring high interest rates and fees. The loans are often packed with junk insurance products and customers are also routinely “flipped” from one loan to another.
The provision at issue (G.S. 53-180.1) was enacted last year as part of legislation that gave the industry the authority to significantly raise the amounts it charges for loans. While failing to protect the rest of us from these predatory lending practices, the General Assembly was shamed into including some modest protections for military service members, whose paychecks are often targeted by the industry. The provision requires lenders to make sure that they do not extend loans to lower ranking enlisted personnel without at least notifying their commanding officers. It also prevents lenders from trying to collect on loans via phone or email from service members or their spouses while the service member is deployed to a dangerous area.
Now, less than a year after the protections were enacted, it appears that at least some lenders want the law (or its enforcement) weakened. For some time, it has been rumored that industry lobbyists have been working on such an effort and recently, insiders report, an industry representative confirmed the rumor.
In addition to raising the real prospect that junior service members could be exploited before heading off to Afghanistan or some other dangerous venue, such a potential change also raises important political issues in the Senate race between Senator Kay Hagan and House Speaker Thom Tillis. In recent weeks Tillis has gone out of his way to portray himself as even more military-friendly than Hagan – a senator who has made working to help North Carolina military personnel perhaps her most visible cause for the past five years.
Any chance that Tillis will be able to successfully attack Hagan on military issues, however, would likely be in real jeopardy if he were to be seen allowing industry legislation weakening the military protections to proceed in the 2014 session while he remains in charge of the House. You can almost hear Hagan’s campaign staff licking their lips at the prospect of running ads attacking such a move.
That said, Tillis has also received substantial financial support in recent years from the consumer finance industry. A 2012 report from the watchdog group Democracy NC reported that:
“A revised campaign disclosure report filed by House Speaker Thom Tillis earlier this month reveals that he received more than $20,000 last October from a special-interest group whose priority legislation he pushed through the House despite stiff opposition from consumer advocates and the United States military. [Editor’s note: This refers to a 2011 bill — not the law referenced above that passed in 2013].
The campaign contributions came from 28 donors and two political action committees associated with the consumer finance industry that specializes in small loans for buying automobiles, household goods and personal emergencies. The fees and interest rates that loan companies charge customers are regulated by the NC General Assembly.”
The bottom line: Summer temperatures are rising at the General Assembly and it will be interesting to see which heat source Speaker Tillis is more responsive to in the coming weeks: a sketchy but friendly and deep-pocketed industry or the prospect of handing one of the state’s largest and most important political constituencies to his opponent. Stay tuned.