Saturday, May 16, 2009

Deeds Campaign Gets Defensive/Aggressive: And Reveals Something About Itself


The overall capable and energetic Deeds campaign staffers have done a very good job in the campaign so far. However, the campaign’s apparently creating controversy where there is none. In so doing, it has created a problem of its own. And you have to wonder whether they shouldn’t have just staked out the record and let that be that. Instead, in its railing against McAuliffe about payday lending and falsely claiming that
McAuliffe “attacked” Democrats Warner and Kaine, the Deeds campaign revealed its own shortcomings. First, a little history...

This appeared in the Virginia Pilot in the fall of 1999 (11/17/1999).

The battle over whether triple-digit ``payday'' loans should be more available in Virginia will resurface in the General Assembly next January, the state's banking commissioner and consumer advocates predicted Tuesday.

But the influence of federal banking regulations have made it more difficult for Virginia and other states to curb questionable lending practices, including these high-interest loans to cash-strapped consumers, said Joe Face...

Payday lending, which resulted in usurious rates to borrowers and exploited them into graver financial peril, has been a runaway train since the bill allowing it was passed in Virginia in 2002. Indeed the claims by Deeds of “regulating” in the 2002 bill involved some word-smithing.

Whether or not the bill was marginally better than nothing was debatable. However, it was in its aftermath that the real flood of storefronts began saturating Virginia. While, in the effort to repair the damage, incrementalists, such as Deeds, all well-meaning (they even include the Virginia Interfaith Center for Public Policy, the NAACP and the Virginia Poverty Law Center, all stellar non-partisan organizations), ultimately (in 2002) opened the floodgates to extremely usurious rates—which would have been criminal only a decade ago. Calculated at an annual rate, interest rates of 391% were average. So, efforts in 2002 were both reactive to anticipated problems in Virginia following national bank deregulation, but also permissive.

Unless they voted against the original bill, though, Democrats don’t have much high ground on this particular issue. Again, saying so is not attacking them. Some of them wised up. Some of them, such as the well-intentioned Creigh Deeds, have sought to first improve and, finally, to reverse course.

The fact is, though, they didn’t do it soon enough. And so it’s pretty extraordinary that when Terry McAuliffe became the first to call for the end to payday lending (all other candidates followed in quick pursuit), the Deeds campaign tries to portray this as a liability for McAuliffe. The fact is Terry led on the issue.

In as much as Democrats were involved in the whole nuanced mess, I say, own up to it and fix it. A simple idea. Instead, on May 5th, the Deeds campaign issued a press release blasting Terry McAuliffe with a headline as follows:

McAuliffe ad hurts Democrats' efforts to win back the House of Delegates, breaks positive campaign pledge, and gives false information

The campaign continues:

CHARLOTTESVILLE – Yesterday, Terry McAuliffe released a new radio ad that criticizes Mark Warner, Tim Kaine, and Democratic leaders in the General Assembly on payday lending reform, which is the same negative attack that Jim Gilmore used against Mark Warner in the 2008 U.S. Senate race. Instead of targeting Republicans who have stood in the way of payday lending reform, Terry's ad actually attacks the entire General Assembly, including the Democratic-controlled Senate and Democratic members of the House of Delegates.

You can listen to the audio of the McAuliffe ad here. Then, using the the text below, Joe Abbey purports that Terry McAuliffe has “attacked” Mark Warner and Tim Kaine (when he did not).

In Terry's ad, the announcer says: “But some loans come at too high [of] a price because legislation that was passed in Richmond in 2002 allowed predatory payday lenders to do business in Virginia. The legislation even allowed lenders to make loans with annual percentage rates as high as 391 percent. In these tough economic times, the legislature is finally working towards fixing this problem, but why has it taken so long to stop these lenders from preying on Virginia’s most vulnerable families? ”

And then this:

"The McAuliffe campaign's claim that Terry is the only candidate who supports a ban on payday lending is an outright lie. Every Democrat in this race has pledged to end payday lending in Virginia, but Creigh Deeds is the only one who stood with Tim Kaine earlier this year to pass meaningful payday lending reform to protect our families."

Not exactly. The McAuliffe ad did err that, in the time since McAuliffe first announced support for an abolition of payday lending, the other two candidates followed suit. But they only did so when one-upped by the McAuliffe campaign. In fact, had McAuliffe not staked out this position, it is doubtful the other two would have. We'll never know.

Then this week (May 14) the Deeds campaign released a radio ad which protracted this argument and further strained credibility. Here’s the text:

RADIO AD - "Disappointed"
Female: Disappointed.
Male announcer: Yep, disappointed that McAuliffe is attacking his opponents.
Female announcer: Even after he promised not to say anything negative?
Male announcer: And he's even attacking Mark Warner and Tim Kaine record’s in a new radio ad.
Female announcer: Really?
Male announcer: Yep, McAuliffe wants you to believe Warner, Kaine and Democrats in the legislature went easy on those payday lending companies.
Female announcer: That’s the same attack Jim Gilmore tried against Mark Warner.
Male announcer: It didn’t work then and won’t work now.
Female announcer: Kinda strange for someone like Terry McAuliffe who made millions in the high interest credit card business himself to use this deceptive Republican attack.
Male announcer: Well, it's a good thing we have a friend like Creigh Deeds fighting for us.
Female announcer: I know, it was State Senator Deeds who stood With Gov. Kaine to pass new laws that crackdown on payday lenders.
Male announcer: And Deeds is the most qualified Democrat to carry on the Warner-Kaine agenda.
Female announcer: That's why leaders like Senators Yvonne Miller, Louise Lucas and Henry Marsh are supporting Creigh Deeds for Governor.

Here the campaign goes negative while claiming the other guy is. The ad is also extremely misleading. The history of Deeds on payday lending is a lot more nuanced. The Deeds campaign claims “2002: In the initial legislation, Creigh voted for the original language to regulate payday lending in 2002 (HB940).” Previously, the loans would have been considered usurious. But, as I said earlier, the 2002 bill not only “regulated” the loans, it permitted them in the first place. In 2002 the legislature performed either the unthinkable or the good, depending upon whom you believe. Here’s the bill. The wording amended the state’s previous anti-usury laws. And here’s a summary of the law (along with other laws passed that year) From the Virginia Legislative Service back then here.

The payday lending bill was an exploitative mess. Yet since then incrementalists have taken baby steps to fix it. Rather than 1) never voted it into law in the first place, or 2) repealing it altogether, our General Assembly took the easy path, Dems and Republicans. They were so loathe to cut short a fledgling “industry” they would not do what was necessary. On April 3rd Terry McAuliffe called for an end to payday loans. Said the Richmond Times Dispatch at on April 3rd:

McAuliffe's two foes in the June 9 primary echoed his proposal, though both Sen. R. Creigh Deeds of Bath County and former Del. Brian J. Moran of Alexandria voted in 2002 to open Virginia to payday lenders.

So Deeds got “religion” on the subject echoing McAuliffe. Bandwagons are nice, but they don’t count for being the courageous first one to openly take on the wrath of the payday lending “industry.” Then on May 8th, the Deeds campaign included the the chronology in a press release:

2002: In the initial legislation, Creigh voted for the original language to regulate payday lending in 2002. [HB940]
2003: Creigh voted to support “truth in advertising” legislation for the payday lending industry in 2003. [HB1769]
2004: Creigh voted for stricter regulations on payday loan paperwork. [HB688]
2005: Creigh voted to prohibit payday lenders from lending to military personnel or their spouses if a base commander has declared a location restricted. [HB1156]
2007: Creigh voted to create an internet database of loan holders to ensure that a payday lender could not hand out anymore loans to individuals with multiple outstanding loans. [SB1014]
2008: Creigh supported legislation to cap interest loans for payday loans at 36% and to put strict regulations on the payday lending industry. [SB588, HB12]
2009: Earlier this year, Creigh co-patroned legislation to crackdown on payday lenders, which was signed into law by Governor Kaine. [SB1470]
CREIGH DEEDS ON APRIL 8, 2009: Creigh Deeds joined Governor Kaine in supporting a major crackdown on payday lenders in Virginia. [SB 1470, 4/8/09]

The upshot is that Deeds was right about one thing: There was a factual error in McAuliffe’s ad. Terry’s ad should have stated that he (McAuliffe) was the first to call for an end to payday lending. He wasn’t the only one opposing it. Yet the error hardly justified what has come next. Then, instead of just requesting a correction, the Deeds campaign tried to contrast Deeds new complete opposition to payday lending with McAuliffe's raising money (while Deeds was taking on payday lenders McAuliffe was raising money). This erroneously implied that McAuliffe supports payday lending and that Deeds was “to the rescue,” while McAuliffe was not. Then, Deeds campaign upped the ante even more, falsely claiming in both a press release and an ad that McAuliffe attacked Tim Kaine and Mark Warner. It’s possibly an act of desperation. And the Deeds campaign doesn’t need to stoop to this stuff.

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