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Albany puts those in need on hold until next session Promises to curb abuse by lenders and merchants stall as lawmakers go on hiatus

During the waning days of this year's state legislative session, Albany's leaders apparently have found a way to give themselves an eventual raise.

But when it comes to looking out for some of the poorest residents being gouged by abusive -- and sometimes illegal -- financial practices, the legislators will wind up the session by doing virtually nothing.

Bills that would have made significant changes in mortgage lending, the rent-to-own industry and other areas were left on the table. So was any effort to crack down on illegal check-cashers.

"I guess I'm disappointed, because I don't know what Albany has accomplished. The legislators aren't really doing anything," said Carol Brent, staff attorney at Legal Services for the Elderly, Disabled and Disadvantaged of Western New York.

The inaction follows public hearings and public promises in the wake of The Buffalo News' series "The High Cost of Being Poor" and "The Merchants of Debt" exposing financial practices that victimize the working poor. Several consumer protection bills were introduced in the Assembly, but few passed. And fewer still were approved in the Senate.

In the end, only a couple were signed into law by Gov. Eliot L. Spitzer -- and critics dismiss those as token efforts with little real impact.

"I don't think they really followed up on any promises," said Kirsten Keefe, staff attorney at the Empire Justice Center in Albany. "I don't know of anything that was really passed to help."

State lawmakers and regulators say they are still determined to act. They say they learned a lot and gathered information that will, in the words of a top Assembly aide, "give us a good starting basis for next session."

But even Spitzer -- who negotiated the impending legislative pay hike in return for other priorities -- conceded last week that "not enough" was done for folks at the other end of the economic spectrum.

"This is the next set of priorities," the governor said of efforts to stop abuses of the working poor. "It speaks to the basic fairness of our society."

Problems outlined in The News' series include:

* Corner stores operating without a check-cashing license and illegally charging customers up to 10 percent -- often $30, $40 or more -- to cash tax refund, payroll and other checks. State law limits such fees to 99 cents.

* Rent-to-own stores that market to those who can't get credit while taking advantage of a loophole in state law letting them charge two or three times what a stove or washer is worth.

* Predatory lenders who target those with poor credit, writing mortgages they know the homeowner cannot repay, practically guaranteeing a foreclosure.

* Insurers who charge more to drivers in poor neighborhoods, regardless of driving record or claims history.

* "Instant refund" tax services that gouge desperate consumers with annual interest rates of up to 180 percent on refund anticipation loans even though state law caps small-loan rates at 25 percent. The tax preparers get away with it by using out-of-state banks.

* Debt collectors illegally harassing and threatening consumers, even if they'd paid off the debt or never owed the money in the first place.

>Legislative gridlock

Put it all together, and Albany had what military analysts call a "target rich environment." But Spitzer and lawmakers zeroed in on practically none of it, despite holding public hearings in Buffalo and in New York City.

For instance:

A series of bills to curb debt-collection abuses passed the Assembly, including a measure to prevent creditors from freezing parts of bank accounts containing "exempt" government payments like Social Security deposits. But the bills never became law because they never passed the Senate.

Buffalo Democrat Crystal D. Peoples, along with two key committee leaders, sponsored an Assembly bill to cap the price rent-to-own stores can charge. The bill never made it out of the Assembly. Sen. Dale Volker's office promised to look into the issue, but the Senate passed nothing, either.

Former Sen. Marc A. Coppola promised legislation to explicitly empower the state Banking Department to go after corner stores illegally cashing checks after the department claimed it lacked such authority.

But Coppola lost his seat in November. His successor, Antoine M. Thompson, has not addressed the issue.The Legislature passed nothing on those two issues, either.

Meanwhile, the only bill dealing with illegal check-cashing -- from a Schenectady County senator -- would hike existing penalties while still never saying who will enforce the law. It remains in committee, as do bills addressing abuses in mortgage lending and tax preparation.

Lawmakers acknowledge little was done, and cite a variety of reasons.

Peoples, who co-sponsored the rent-to-own bill, blamed the fact that chairmen of key committees like banking and consumer affairs did not push the legislation.

Does that mean rank-and-file legislators from Western New York are powerless?

Peoples said if that were the case, the Buffalo hearing never would have been held. But she called the inaction a "travesty," and said committee chairs "really drive the agenda on these issues."

"If everybody else doesn't think it's a travesty and works on it with that level of energy, [reform] doesn't happen right away," she lamented.

Kenmore Democrat Robin Schimminger -- who chairs a committee, the Assembly's economic development panel -- said no one raised such concerns with him.

"I didn't hear from my constituents an outcry for change in this regard," Schimminger said. Buffalo Democrat Sam Hoyt also pointed to the Assembly hearing held here, contrasting that with the Senate, which he called "less likely to stand up for the little guy."

But he conceded "we could do better," adding that he'd give his chamber a C-plus grade.

>Changing tactics

In the Senate, where Democrats generally are powerless, Thompson said he just got appointed to the Insurance Committee. He said he plans to push legislation preventing consumers in poor neighborhoods from being charged more simply because of where they live. Still, he has no illusions about the chamber taking up the cause of working-class people.

"Some of these issues will require a number of advocacy groups to weigh in on," he said.

Volker, the dean of the local delegation, did not respond to calls or e-mails to comment.

Given the lack of action, Peoples said her staff has discussed changing tacks and trying to enlist Spitzer's office to sponsor legislation.

The Senate might "become more interested when the governor gets interested," she said.

With little substantive coming out of the Legislature, the Erie County district attorney's office -- working with state tax officials -- looked at stores cited by The News for charging excessive check-cashing fees. The inquiry focused on possible income tax violations. But District Attorney Frank J. Clark said last week tax officials determined that the way the stores keep their records made it too difficult to pursue a case.

As for his office going after stores for breaking the check-cashing law, that hasn't happened either.

"No cases have been referred to us, none," Clark said.

After last year's series, the Common Council passed a law requiring stores to let the city know if they cash checks, thus providing leverage to shut down those that rip off residents, said Majority Leader Dominic J. Bonifacio Jr., chief sponsor.

One way to back up the law, Bonifacio said, would be to get state officials to run undercover stings using government employees to cash checks, similar to the stings at stores suspected of selling alcohol or cigarettes to minors.

"That's the only way you can prove to a judge that the violation occurred," he said.

But Bonifacio said he hasn't had conversations with state officials about such stings. He said he hasn't gotten any complaints about check cashing since the newspaper investigation.

"I think The News put everybody in their place. Sometimes you guys get things done a lot quicker than we do," he said.

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