Fulton County Superior Court Judge Marvin Arrington has ruled that Insurance Commissioner John W. Oxendine disregarded application requirements when awarding small-loan licenses, according to a decision received by the state today.
Middle Georgia Management Services, a loan company owned by state Rep. Rusty Kidd (I-Milledgeville), sued Oxendine last month, seeking an injunction to force Oxendine to follow state regulations when issuing the licenses. The company accused Oxendine of bypassing application requirements and awarding lending licenses to political supporters.
Arrington granted the company's request for a temporary restraining order, which requires Oxendine to follow state law and regulations when issuing the licenses. The judge ruled that Oxendine was not requiring applicants for licenses to fill out required forms, which the judge said is "not a proper exercise of the interpretive or discretionary powers of the Commissioner."
Oxendine, whose term ends in January, supervises the state's small-loan companies under the Georgia Industrial Loan Act. The loan companies are not banks, and they do not take deposits. They are storefront lenders who can make loans of $3,000 or less. Their customers are usually people with poor credit who can't get a credit card or obtain a loan from a traditional bank.
Oxendine said state rules do require applicants for small-loan licenses to fill out forms providing population statistics and other information about the community surrounding a proposed lending outlet. But the department in recent years disregarded that requirement, Oxendine said, because the information is so readily available on the Internet.
"If we get it ourselves we consider that a better source than an applicant telling us something and us taking their word for it," Oxendine said. "The staff said this is a better source, a better way to get it. So they weren't requiring people to fill out this sheet of paper."
The information is used to determine whether a community would be overrun with lending outlets if a new license is granted. State law requires such a review under the “convenience and advantage” provision of the industrial loan act.
Arrington said Oxendine’s office does not have the authority to ignore its own rules. Oxendine said he has instructed the staff to require the form for all new and pending applications.
Oxendine said Arrington's decision "is not a big deal and it has no material effect on the operation of the department."
Kidd, the Milledgeville legislator who operates a chain of 17 small-loan offices in Middle Georgia, praised Arrington’s decision.
"We commend the judge for looking at the law and realizing there was someone who was going beyond the letter of the law and doing it their own way," said Kidd, when informed of the decision Tuesday. "I'm glad we got it stopped even though it's so late in the term of office of the existing commissioner. I only wish we had done it sooner."
Kidd said that Oxendine's office wasn't doing the job of closely reviewing applications. "The process potentially was hurting both consumers and some business people," he said.
The lawsuit alleged that Oxendine awarded 20 improper licenses this year to EquityAuto Loan LLC, which is a Savannah-based company operated by Tracy Young.
Young is new to the small-loan industry, but he is well-known in Georgia as one of the state’s largest car-title lenders. Young contributed the maximum to Oxendine’s unsuccessful run this year for governor, according to state records.
Oxendine said all licenses issued to Young were appropriate and most were in large urban areas that are in no way overrun with small-loan companies.
Oxendine said Kidd’s court action was really an attempt to stifle competition.
“We have people in this terrible economy who cannot get credit,”Oxendine said. “Credit is hard to get and he is trying to prohibit competition.”
Kidd said he simply wants Oxendine to follow the rules.
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