HARRISBURG, Pa. - Four months after he announced tough steps to address predatory lending in Pennsylvania and joined with Gov. Ed Rendell in supporting legislation that was intended to legalize the practice in the state while enforcing restrictions on loan amounts and providing consumer protections, Pennsylvania Banking Secretary Bill Schenck and the governor withdrew their support for the legislation after elected officials voted down the idea of tracking payday loans through a state database. In response, Schenck and Gov. Rendell have urged more credit unions to get involved with making short-term loans. "The more competition, the better," says Schenck. "The more providers there are, the lower the cost will be." Rep. W. Curtis Thomas (D-Philadelphia) who opposed the original payday bill, said the legislature must find other ways to bring traditional institutions into the marketplace. "Where we should be focusing our attention is expanding the community credit union law and giving people a safe market to borrow," said Thomas. In March, Schenck announced his intention to get tough on enforcing consumer protection legislation. As part of his plan, he set up a new Investigations Division to expand the agency's historic role of just being an examiner of credit unions and banks, to also include an enforcement role. In addition, he wanted to set up a database with other states of people who had been found guilty of practicing abusive lending services so agencies in various states could share information on the perpetrators. At the time, Schenck said he had the full support of Gov. Rendell on the Investigations Division. That same month, Schenck released the findings of a statewide foreclosure report he presented to the Pennsylvania General Assembly - "Losing the American Dream" - that the Department of Banking was directed to conduct by House Resolution 234 which found that on a statewide basis, foreclosures in Pennsylvania had "skyrocketed." After releasing the study result, Schenck announced his intention to press for new laws and regulations aimed at lessening the surge in home foreclosures in the state, many of which he said were found to result from unscrupulous lending practices and subprime lending. -

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