NC House aids consumer lending industry over Cooper’s veto

North Carolina Gov. Roy Cooper says he will veto the budget bill from the North Carolina legislature during a press conference at the Executive Mansion on June 26, 2017 in Raleigh.
North Carolina Gov. Roy Cooper says he will veto the budget bill from the North Carolina legislature during a press conference at the Executive Mansion on June 26, 2017 in Raleigh. rwillett@newsobserver.com

A proposal opposed by consumer advocates is a step away from becoming law after the state House voted Thursday to override Gov. Roy Cooper’s veto.

House Bill 140 started out with a focus on dental care. But on the last day of this year’s regular session, lawmakers inserted an unrelated provision that would help companies that sell high-interest-rate consumer loans.

Those lenders often sell something called credit insurance, which is an extra payment on top of the loan that ostensibly protects the borrower in case of an emergency. The bill would expand the types of loans that companies can add insurance to.

The vote to override the Democratic governor’s veto was 72-43 in the House. The measure goes next to the Senate.

It takes a three-fifths majority in the General Assembly to override a veto, and Republicans can muster those supermajorities in both the House and Senate as long as GOP members vote the party line.

So far this year, Cooper has vetoed 11 bills. The legislature has overriden five of his vetoes, and House members voted to override two more Thursday, including on a wide-ranging bill that Cooper said allowed an employee to collect two state salaries. Four more vetoes are waiting for potential House and Senate votes.

The North Carolina attorney general’s office lists multiple warnings about credit insurance online, under its “Consumer” webpage.

“In North Carolina, lenders cannot require you to buy most types of credit insurance,” one warning says. “But some lenders may imply that credit insurance is necessary for you to get the loan, or they may automatically include the insurance as part of the loan agreement you’re given to sign.”

Currently the market for credit insurance is limited to loans for “personal household property,” like furniture and appliances. But the bill would open the market for this insurance to high-interest loans for all types of personal property, including things like jewelry, off-road vehicles and more.

“The insurance company’s rate of return is about 60 percent, which is grotesque,” Rep. Deb Butler, a Wilmington Democrat, said during debate in the House. “... This type of insurance is a gravy train for insurance companies. It preys on poor people.”

Rep. John Szoka, a Fayetteville Republican who defended the bill, said that when state law that covers the insurance was originally written, things like ATVs and JetSkis were rare, but now lots of people want them.

“It’s just trying to update things for the way people live today,” Szoka said.

Similarly, Royce Everette – who owns two dozen consumer lending offices statewide and also works for the Resident Lenders of North Carolina group – has said the changes are “just modernizing the law.”

Over the last four years, The News & Observer reported last month, Everette and his mother have given nearly $240,000 to state legislators.

That accounts for nearly half the $530,000 the consumer lending industry has donated to North Carolina politicians and political groups since 2013, with 92 percent going to Republicans.

“In truth, the amendment dramatically expands what the lenders can cover with their junk insurance – everything from dirt bikes to boats to mobile homes,” Bob Hall, executive director of the watchdog group Democracy NC, wrote in the Charlotte Observer.

Of the four remaining vetoes that the legislature has not acted on, one is a deregulation bill and another would allow what critics call “garbage juice” to be sprayed at landfills.

One would allow nonprofits to have gambling-themed fundraisers, and another would change the way Guilford County is required to issue public notices, which at least one local newspaper says would put it out of business.

Doran: 919-836-2858; Twitter: @will_doran