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Credit unions drop payday loan lobbyist

Virginia's credit unions are dropping the influential lawyer-lobbyist they share with payday lenders, citing "negative media coverage" of high-cost instant loans.

Reginald N. Jones has represented the Virginia Credit Union League for 27 years, and for the past six he has simultaneously lobbied the General Assembly for the league and the Community Financial Services Association, umbrella group for the nation's largest payday lenders.

The shuffle could herald a repeat in the 2008 General Assembly of last year's pitched battle over proposed restrictions on payday lenders, who have flourished since Virginia was opened to the loans in 2002.

Though Jones will not serve as the credit unions' voice in the legislative session, he will continue doing legal work for the organization, said Lewis Wood, spokesman for the Virginia Credit Union League.

Wood said the Lynchburg-based league did not believe Jones had a conflict of interest in lobbying for two financial-services industries. But an executive of the nation's biggest credit union, which ended its league membership to protest Jones' dual roles, argued otherwise.

Though credit unions increasingly offer low-cost alternatives to payday loans, which can carry triple-digit interest, the Virginia league has said it does not consider the lenders to be competitors.

Further, the league has been publicly neutral on efforts by lawmakers to cap interest on payday loans at 36 percent.

However, Ralph L. Yeatts, senior vice president of the giant Navy Federal Credit Union said Jones' arrangement with both organizations "absolutely was a conflict of interest."

That's because, Yeatts said from his Fairfax County office, the "high cost of payday loans is contrary, contradictory to the credit union philosophy . . . of helping people with lower rates."

Jones said he did not have a conflict and that the matter had been discussed with both clients and vetted by the ethics counsel of his Richmond law firm, Williams Mullen. He will continue serving as a lobbyist for payday lenders.

"We work hard to make sure we don't have any conflicts," said Jones, whose firm was paid nearly $700,000 for helping stop limits on payday loans in the 2007 legislature.

Wood said media coverage of payday lending could have complicated the league's lobbying efforts, which will now be handled by its president, Richard D. Pillow, and two other senior employees.