By David Steves
The Register-Guard
Wednesday, February 14, 2007
SALEM - The last time the Legislature tried to clamp down on storefront lenders, it took nearly two years to get the job done.
This time, it took just more than a month for a package of bills to clear the House en route to the Senate, where passage is all but assured.
The four bills were aimed at closing loopholes in 2006 legislation regulating the payday loan industry, according to backers.
After leaving the storefront lenders that sprung up throughout Oregon largely unregulated for a decade, the House action brought the state closer to restricting other types of loans. Similar caps on interest rates and fees would be set for check-cashing, car title loans and short-term loans made by out-of-state businesses via telephone, the Internet or the mail.
Rep. Paul Holvey, the Eugene Democrat who shepherded the bills through his committee, said lawmakers needed to complete the job of protecting low-income Oregonians from predatory lending rates.
"It’s been a long time coming for Oregon to regulate this industry for the protection of many Oregonians," he said. "I call it a poverty prevention measure."
All four bills passed with at least 40 votes among the 60 members. The opposition came from Republicans. The only Republican to represent a portion of Lane County, Rep. Bruce Hanna of Roseburg, was excused from House business.
Many of those who spoke out against the bills said they did not see it as the Legislature’s place to interfere with the marketplace - especially one in which an estimated 500,000 Oregonians were able to borrow money to pay their bills.
Rep. Dennis Richardson, R-Central Point, said he had no great love for short-term lenders.
"But that’s not the point," he continued. "The point is, we’re telling ordinary citizens what they should or shouldn’t do because we know what’s best for them."
Rep. Jerry Krummel, R-Wilsonville, said backers of the bills shouldn’t be nibbling around the edges of what he said was an attempt to drive the consumer-lending business out of Oregon.
"If we want to put an industry out of business, let’s just write a bill and put them out of business," said Krummel, an opponent of the bills.
The previous round of legislation followed a far more tortured journey than the 2007 bills have thus far. The effort began in 2005 with a payday loan bill that passed the Democrat-controlled Senate, but languished until adjournment in the House, where the GOP majority declined to allow a vote on the measure.
By 2006, advocates from organized labor and several churches and other faith organizations launched a signature drive to put the question directly before voters as a ballot measure. Against that backdrop, lawmakers took the question up again in an election-year special session. The bill passed, but it soon became clear that other outlets for annual interest rates of as much as 520 percent could still be charged through other means, such as loans made against car titles or via out-of-state lenders.
Rev. Thomas Dodd, pastor of United Lutheran Church in Eugene, was among those who advocated for the loopholes to be closed.
"Lawmakers this session, more than any session in recent memory are recognizing the oppression of the poor and moving to help those who have found themselves snared by multiple-opportunity gougers in hundreds of storefronts across our great state," he said.
The 2005 House refused to take up the proposal. Advocates pushed a ballot measure and the Legislature headed it off with a bill passed in a special session last year.
LOAN REGULATIONS
Bills that passed the House Tuesday regulate personal finance businesses in the following areas:
Check-cashing: House Bill 2202 requires a license for check-cashing businesses. Fees capped at $5 or 3 percent of the check, whichever is greater.
Out-of-state lenders: HB 2203 imposes the same 36 percent annual interest-rate cap and 10-percent limit on origination fees for out-of-state entities making payday loans as for those in-state business subject to last year’s regulations.
Car title loans: HB 2204 limits annual interest rates at 36 percent and allows only a one-time origination fee, capped at $10 per $100 borrowed.
Consumer loan licensing: HB 2205 requires consumer finance licenses for lenders and tightens language adopted last year by regulators.
Payday Loan Fairness: [x] Yes, [] No
©2006 Our Oregon. All rights reserved. Photos by Leah Nash.