Moore, chairman of the state banking commission, is expected to announce at a news conference this morning a proposal for major N.C. banks to replace payday lenders. It's the latest, and most dramatic, move in the debate over payday lending, the controversial business of making a maximum 31-day loan secured by a postdated check. More than 400,000 N.C. residents used payday lenders in 1999, the most recent year for which figures are available.
Critics say the practice traps consumers in a cycle of debt.
Critics also contend some lenders illegally roll over loans that customers can't pay, adding new fees and making it hard for borrowers to ever pay the entire amount. Supporters say the more than 800 payday outlets that operate in the state fill short-term cash needs that banks don't and keep people from turning to pawn shops or loan sharks. The 1997 law that allows payday lending expires in July. This year, lawmakers have proposed four different bills to allow the lending to continue, but with new restrictions. Payday lenders back a bill that limits the number of loans a person can have at one time.