Trial lawyers, lenders take sides over bill
(2/23/02 Clarion Ledger, MS) By Patrice Sawyer

Gov. Ronnie Musgrove met with top banking officials behind closed doors Friday for more than an hour to discuss a controversial bill that limits the amount of money consumers can receive if a lender defrauds them.

The meeting is part of a push by opponents and supporters to influence the governor on his decision regarding House Bill 1646. The bill is in his hands after passing the House and Senate.

The bill, which passed the House by a vote of 106-11 last month before opposition was mounted, has pitted bankers on one side and trial lawyers and retirees on the other.

Musgrove, who has received campaign contributions from both trial lawyers and bankers, said he's made no decision.

He has until midnight Tuesday to act on the bill. He could sign or veto it. Or he could let the legislation become law without his signature.

The legislation would prevent lawsuits in state court, but Mississippi Economic Council President Blake Wilson said it doesn't stop a consumer from filing a fair lending lawsuit in federal court.

"Anything that provides a first stop avenue and you're not making the first stop in the courtroom is a positive step," Wilson said. "It sets up a good system."

David Baria, president-elect of the Mississippi Trial Lawyers Association, said members have contacted the governor's staff and requested that Musgrove veto the bill. Baria said the bill is a bad attempt at changing the state's civil justice system on lawsuits, commonly called tort reform.

"I call it the 'Predatory Lending Practices Legalization Act. ' It's ridiculous," Baria said. "What it says is a lending institution can commit fraud, and there is absolutely no remedy for the consumer other than what's in the law."

Charles Harris, director of Housing Education and Economic Development, or HEED, which educates the public on housing issues such as foreclosure prevention and pre-purchase counseling, said the bill is bad news for consumers.

He, too, says it would legalize predatory lending and leave the elderly vulnerable. He said deceptive lenders prey on the elderly who are often stuck with paying fees they don't know are hidden in a mortgage loan, such as a prepayment penalty.

"It means if you try to pay off that mortgage early, they penalize you thousands and thousands of dollars," he said.

Under the legislation, a lender would forfeit all finance charges if it levies "other charges" of $500 by "false, misleading, deceptive or fraudulent means." Other charges may include credit life insurance.

The principal amount would be forfeited, in addition to finance charges, if the fraudulent charge is $1,500.

The bill also states that the repayment of deceptive charges, including penalties, "shall be the exclusive remedies and penalties for all claims" against a lender.

Mac Deaver, executive director of the Mississippi Bankers Association, has said the legislation would punish lenders who are guilty of charging consumers illegal fees on loans and would also provide guidelines for repaying people who are overcharged.

Deaver, who participated in Friday's meeting with the governor, said he didn't think it was appropriate to talk about what was discussed in the meeting or who attended.

Trustmark President and CEO Richard Hickson, BancorpSouth Chairman and CEO Aubrey Patterson and People's Bank of Ripley President Bobby Martin also were among those attending the meeting to request Musgrove's support of the legislation.

After the meeting, the governor said he and his staff are examining the bill and they are talking to people impacted by the legislation, including the American Association of Retired Persons, trial lawyers and bankers.

"I'm still studying the bill to understand the provisions," he said.

The governor is scheduled to attend the National Governor's Association meeting in Washington, D. C. , starting today, and he plans to return Tuesday afternoon.

Those commenting to Musgrove about the bill are some of the top contributors to his campaign war chest.

Martin donated $75,000 and Patterson gave $2,000.

Campaign finance reports show Hickson didn't donate any money.

Trial lawyers also have donated heavily to Musgrove, including $37,000 from the current president of the Trial Lawyers Association, Shane Langston.