Paycheck politics

Where do politicians turn when they need a spot of cash? In the case of the Democratic Party of San Diego County, to Advance America, “one of the nation’s leading payday loan companies” that has “helped millions of hardworking Americans overcome financial challenges,” according to its website. The Spartanburg, South Carolina–based firm gave the party $1000 on August 18, according to a recent financial report.

A lot of states ban such lending operations, which allow clients to borrow against their next paycheck, and there’s a move afoot in Congress to impose a nationwide prohibition of the practice. The loans don’t come cheap. California law, which limits the amount of such transactions to $300 each from a given lending firm, currently allows the lender to charge up to 15 percent of the face value of a paycheck, while waiting two weeks to cash it, amounting to an average annual rate of 460 percent.

Customers tend to be lower-income workers living paycheck to paycheck who don’t have enough credit to get a better deal elsewhere. Ninety percent of industry revenue comes from those who have to roll over their loans every payday, says the Center for Responsible Lending, which wants to stop the practice. Advance America argues that the loans are a “dignified, transparent and responsible” way to get quick cash without “asking family or friends for money or risking personal items as collateral.”

The firm, which has 19 storefronts in San Diego County, is working both sides of the fence to advance its agenda in Sacramento. In May, it contributed $1000 each to Democrat Marty Block and Republican Joel Anderson, and on June 10, according to disclosure filings, it paid $21.36 to take Anderson out to lunch at Sacramento’s Lucca Restaurant. The firm spent a grand total of $19,628 in the second quarter of the year lobbying legislators regarding Assembly Bill 377, authored by Norwalk Democrat Tony Mendoza, which would raise the $300 loan maximum to $500, and AB 33, which would reorganize state lending regulators. On March 18, Mendoza got a dinner worth $75.92 at Sacramento’s McCormick and Schmick’s. Both bills are still making their way through the legislature. Reached this week by phone, county Democratic Party chairman Jess Durfee said there “was no clear reason for the contribution," which he said “came in unsolicited.”