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AARP opposes payday lending bill

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AARP of North Carolina has lined up as an opponent of a bill introduced in the state Senate that would revive payday lending.

Doug Dickerson, AARP's state director, recently wrote a letter to the sponsors of Senate Bill 89 urging them to reconsider their stance.

"AARP is concerned about the effect that payday loans have on the lives of indigent senior citizens, struggling families and the cash-straped unemployed and under-employed," Dickerson wrote. "This legislation would legalize high-interest payday loans that by design keep borrowers in debt."

Dickerson also argues that payday lending is counter-productive from a macroeconomic point of view..

"Evidence shows that borrowers in payday loans spend less on other goods and services because they are spending hundreds of dollars to pay off their debt to out-of-state lenders," he wrote.

AARP officials couldn't immediately be reached for additional comment. The organization is a long-time foe of payday lending in North Carolina, which the state outlawed in 2001 and managed to eradicate in 2006.

The exception came in 2011, when Regions Bank took advantage of a legal loophole to launch a loan that critics claimed was a payday loan; Regions Bank, which insisted it wasn't a payday loan at all, stopped offering the loans last month after being pressured by Attorney General Roy Cooper's office.

Primary bill sponsor Sen. Jerry Tillman, a Republican from Archdale, has argued that although his bill would revive payday lending in the state, it contains safeguards that protects consumers from the abusive payday loans that the state prohibited more than a decade ago. But that argument hasn't gained any traction with advocacy groups for consumers and the poor.

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Think of the People Who Need Help.

If AARP is worried about "indigent senior citizens, struggling families and the cash-straped unemployed and under-employed," they should support this legislation. It gives these folks a place to turn when they get into a financial bind. Yes, there are fees, but the fees are regulated. If North Carolina doesn't allow Payday Lending to return, folks will continue turning to unregulated loan sources such as online lenders and loan sharks.

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About the blogger

David Ranii has been a business reporter at The News & Observer since 1993. Over the years he has covered information technology, banking, insurance, the pharmaceutical and biotechnology industries, media businesses and real estate. Contact him at 919-829-4877 or e-mail him.
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