Evening star., 1943-05-30
Virginia Council Maps
Curbs on Small Loans
And Interest Rates
New Restrictions Would
Set q $500 Limit for
individual Borrowers
By the Associated Press.

RICHMOND, May 29-Broa
powers to make rules and regula
tlons to govern the small loan busi-
ness in Virginia would be conferred
on the State Corporation Commits
sion by a proposed small loan bill
being studied by a committee OF
the Virginia Advisory Legislative
Council
The new proposal is designed to
strengthen the old law, particularly
in the matter of regulatory pro-
visions.
The Virginia Association of Small
Loan Companies is supporting a
move to have the present laws re-
vlsed and has agreed to submit sug-
gestlons and comments on the new
proposal offered to the committee
by the State Corporation Commits
sion.
Senator Heads Committee.
The committee, headed by Sena
| tor Robert O. Norris, Jr. has held
one public hearing on small loan
company regulations and plans to
conduct another hearing July II tc
discuss the proposed bill. The COM
mlttee will also give consideration
to interest rates. but at a later date
The proposed bill provided for a
split rate that is, a higher rate
tor the smaller loans and a lower
rate for the larger loans. This is
said to be the solution of the rate
problem approved and now in effect
in majority of the States.
Authors of the bill suggest no
specific rate at this time. it was said
since the effect of the present rate
may rot be even approximately de-
termined until after July l. The
present rate is 2 per cent per month
having been reduced from 3ia by
I the 1912 General Assembly.
Under the broader powers pro-
posed for the commission. the is
suance of a license would be largely
discretionary, depending on the
findings of the commission with re-
. spect to the financial responsibility
character and fitness of the appli-
! cant, the convenience and advan-
tage of the community, and an
available liquid minimum capital of
$4,000.
Under the present law, if the
license fee is paid and bond of
$1,000 is furnished, the issuance of
the license is mandatory.
The proposed bill would also
authorize the commission to institute
| injunction proceedings against per-
sons operating without license and
IN violation of the act. The COM
mission itself under the present act
mas no authority to enforce its pro-
Visions, Or prevent its violation bv
either civil or criminal process, ex-
cept with respect to persons who
voluntarily apply for and obtain
1 licenses.
Uniform Methods.
Another section would provide a
specific and uniform method of com
putting the charges authorized by
the act. There is no such provision
in the present law and much con-
fusion and some litigation is said
to have resulted.
There would be prohibition
against charging in excess of 6 pei
cent per annum on any loan in
excess of $500. There would be a
prohibition also against a borrower
from becoming indebted to licensee
directly or contingently in excess
OF $500. Exception to this provision
would be made where a pre-existing
creditor for goods or services, offers
to guarantee loans to more than
one person, aggregating more than
$500 plus 6 per cent per annum only
to discharge such pre- existing debts
The bill suggested by the Corpora
ton Commission is based largely on
the latest revision of the model laws
drafted by the Russell Sage Foun-
dation, philanthropic organization
which has long favored small loan
laws to combat loan sharks"