Although they operate thousands of branches across the country, the country’s three largest auto title lenders want Virginia officials to treat them as private citizens and grant them the same right to keep their financial records out of the blue. public view.
The Three Lenders – TitleMax of Virginia Inc .; Anderson Financial Services LLC, doing business as Loan Max; and Fast Auto Loans Inc. – filed legal arguments asking Virginia officials to prevent disclosure of the financial reports they submitted to the state to the Center for Public Integrity.
Annual reports include detailed sales figures, loan volumes, interest rates, the number of cars repossessed in borrower defaults, and how often lenders have issues with state and federal regulators. TitleMax, Loan Max and Fast Auto Loans submitted heavily drafted reports last month at the commission’s request ahead of its hearing.
In defending the written reports, the companies argued in their latest documents that the reports constitute “personal financial information” that should be exempt from disclosure, just as it would be for anyone.
âFast Auto’s personal financial information should be treated as confidential just as an individual’s personal financial information would be,â the company wrote in its filing submitted Friday.
At a Jan. 27 hearing in Richmond, the Virginia State Corporation Commission, which oversees the state’s financial institutions, called for more legal arguments. The question is whether the reports should be made public, as commission staff recommended last year, or whether the information should be withheld from the public. Much of the debate at the hearing focused on whether lenders should have the same rights of confidentiality over financial records as an individual under the law.
Attorney Erin Witte, who represented the Center for Public Integrity, argued that state financial privacy laws are meant to protect consumers, not large loan companies. Securities lenders âare national companies subject to strict regulations depending on the type of activity they carry out; lend money at triple-digit interest rates to consumers on the fringes of society who often have no other financial means or options, âshe wrote.
The Bureau of Financial Institutions Commission, the regulatory division of the Virginia State Corporation Commission, agreed that businesses are not people when it comes to protecting their finances. For 25 years, the office “has consistently interpreted personal financial information as limited to financial information about individuals,” the office wrote in its file. The office said there was no “legal basis” for keeping the reports confidential and that they should be published.
In its brief, TitleMax noted that the reports contained what it called “trade secrets”, the disclosure of which could cause the company “irreparable damage”. LoanMax called for a change in state law or an administrative rule process before a decision is made.
The Center for Public Integrity requested annual reports from officials in Virginia in November as part of a nationwide investigation into the costs of securities lending. In Virginia, where nearly 500 securities lending stores operate, average interest rates were 222% in 2014, according to aggregate state figures.
Securities lenders don’t deny that the interest rates they charge are high. But companies say they are providing a vital service to people deprived of bank credit.
Critics argue that securities lending exploits low-income people and should be banned, or at least strictly regulated, to keep interest rates manageable. This argument made little headway in the Virginia General Assembly, which earlier this year struck down several bills aimed at strengthening industry oversight, including a bill that would have capped rates on the industry. 36% interest.
A failed bill would have asked state officials to assess the profit margins of securities lending and consider whether eligible interest rates should be reduced.
The joint House resolution sponsored by Del. Mark D. Sickles, a Democrat at Fairfax, argued that the General Assembly “does not have access to data that would allow it to determine whether the costs of such loans are excessive or unreasonable.”
Witte said the publication of the annual reports could help regulators understand how companies work.
âThe scrutiny of these companies is appropriate and indeed necessary to ensure that they do not further benefit Virginia’s most vulnerable consumers,â Witte wrote.
It is legal in about half of the states to pledge a car title as security for a loan. Some states have caps on the interest rates they charge, while in other areas borrowers can pay 300% or more for small loans.
It can be difficult to get a complete picture of the total cost of securities lending, both in fees paid and in lost vehicles. Regulators in many states do not require lenders to file detailed financial figures, including interest and default rates, or they keep information confidential. Yet in Missouri, where the three Virginia securities lenders also operate, annual financial reports are public documents and anyone can request copies.