New Delaware Legislation Hopes to Ward Off Financial Predators

Legislation would protect families fighting for financial independence

May 13, 2009 -- DOVER – Delaware Governor Jack Markell joined with Sen. Robert Marshall, D-Wilmington, and Rep. Bryon Short, D-Brandywine, to unveil legislation Wednesday that aims to protect Delaware families from the scourge of predatory lenders.

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“Families who fall victim to subprime loan schemes and other financial predators see their economic opportunity crumble beneath a mountain of high interest rates,” Markell said. “I am proud to be standing with Sen. Marshall and Rep. Short to stand up for these families and stand up against financial predators.”

Specifically, the legislation would require that any payday lender who wishes to set up shop in Delaware pay a surcharge of $1,500 per location in addition to the existing licensing fee. The fee will be used to fund financial literacy education and promotion of low-interest community-based loan programs. The Governor’s proposal also creates a similar surcharge for title lenders and goes further in protecting families by helping to ensure that a consumer’s debt exposure on a title loan is limited to the value of the vehicle itself.

“Payday lending is a practice that while essential in some cases, presents problems for some of those people who use these cash advances,” said Rep. Short, the lead House sponsor of the bill. “Requiring these lenders to obtain a state license will help ensure that the businesses that set up are held accountable and are operating in good faith. Using the revenue generated by the fee to fund financial literacy and loan programs is a great way to help the very people who use cash advances, educating them so that they can better manage their finances.”

Source: Delaware Governor