Oregon Taking Measures to Curb Interest Rates on Payday Loans
The AP reports that community activists, union leaders and church groups are banding together to promote a measure for November's ballot to limit the loan rates charged by payday lenders throughout Oregon.
The payday loan industry has been growing rapidly. But unlike other states that have been trying to outlaw these cash advances entirely, backers of the Oregon initiative are just looking to protect people from lenders who at times charge more than 500 percent interest.
To help bring about such a change, the Our Oregon coalition is teaming up with the main state chapter of the Service Employees International Union, Ecumenical Ministries of Oregon, the Oregon Food Bank and other groups to place the measure before voters this fall.
“We're going to have a huge volunteer program on this. People are very excited about it,�? said Patty Wentz of the Our Oregon coalition, which filed the initiative to cap most payday loan annual interest rates at 36 percent and loan origination fees at 10 percent.
The coming ballot measure campaign will mark a resumption of a fight that took place during the 2005 Oregon Legislature when a bill to limit interest rates on payday loans was approved by the Democrat-controlled Senate but died in the Republican-controlled House.
House Republican leaders have since appointed an interim committee to study the payday loan issue, but Wentz said advocates of interest rate caps on payday loans aren't going to wait for the 2007 Legislature to act.
“People were frustrated that reform that was so badly needed was thwarted by the House leadership because the payday loan industry has such great sway there,�? she said.
Any effort to cap interest rates likely will spark strong opposition from payday loan industry officials who say that the quick loan shops sometimes are the only source for a small, short-term payday cash advance for people who run into financial emergencies.
“It's a matter of consumer choice. This is a convenient way for people to get access to cash,�? said Annette Price, a lobbyist for the payday loan industry in Oregon.
But Ellen Lowe, a lobbyist who's worked with church groups over the years on social justice issues, said the high interest rates charged by payday lenders can victimize consumers who often end up even deeper in debt.
Art Powers, political director of SEIU Local 503, said the public employee union plans to take an active role in helping to win voter approval of the interest rate cap measure this fall.
Backers of the measure aren't trying to drive shops offering instant payday loans out of business, Powers said.
“But the idea that payday loan operations can charge 500 percent interest is outrageous,�? he said. “A lot of people are living on the edge, and some people get so desperate that they mistakenly see these loans as a lifeline.�?
As we've reported earlier, it can be difficult for payday loan legislation to pass. We'll follow this story as it develops.