Carson alters payday loan regulations

The city of Carson has backed off plans to crack down on payday lenders after hearing protests from industry lobbyists.

For the last several months, city officials have been considering new regulations on local businesses that issue short-term loans to tide customers over until their next paycheck.

Concerned about the potential for predatory lending, the Planning Commission voted unanimously in February to require conditional-use permits for all payday lenders.

But after hearing strenuous objections from industry lobbyists, the City Council voted 5-0 on Tuesday to back off that proposal. Instead, the city will require permits only from new businesses, and will allow existing payday lenders to be grandfathered in.

Sergio Carrillo, of the Community Financial Services Association of America, praised the council's decision.

"They realized the city must be a business-friendly city," Carrillo said. "To change the laws halfway through is just unfair to those businesses."

Planning Commission Chairman Pele Faletogo said he respected the council's decision, but noted that the commission believed requiring conditional-use permits "was the only way we feel we would have any control on some of these payday lenders infiltrating the city."

There are 11 such lenders in the city, two of which are operating illegally. One of those businesses does not have a state license and the other lacks a business license due to fire code issues.

But Carrillo argued the city should use its existing codes to go after businesses that are out of compliance, rather than creating new regulations for everyone.

The council agreed.

"It isn't fair to punish all of them," Councilwoman Julie Ruiz Raber said.

"Why punish nine businesses for the actions of two that we need to regulate?" asked Councilwoman Lula Davis-Holmes.

Planning Director Sheri Repp-Loadsman said that an elected official, whom she declined to name, had urged the staff to investigate the issue last summer. The Planning Commission held a workshop and staffers did research and developed an ordinance.

Commissioner Olivia Verrett said she had had a conversation with Councilman Mike Gipson about the issue after the local NAACP chapter launched a campaign against predatory lending practices.

"He thought it was worth researching," Verrett said. "I think that Councilman Gipson can see the injurious harm that's being done to some individuals who could not afford to pay the loans back."

In November, Gipson received a $500 contribution from Check into Cash, a payday lender with a storefront in Carson. Check into Cash representatives also met with city staffers in February to lobby against the new ordinance.

At the council meeting on Tuesday, Gipson was the first to speak up on behalf of the payday lenders.

"Bank of America is not going to loan people $250 so they can keep their lights from being disconnected," he said. "For us to disenfranchise the (payday lenders) that are doing well - I have a problem with that."

Asked about the origins of the proposal, Gipson pointed to the recommendation from the Planning Commission.

Article By Gene Maddaus, Staff Writer

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