Bill Graves
The Oregonian
July 27, 2006
Gov. Ted Kulongoski on Thursday vowed to plug loopholes that could allow quick-cash lenders to keep charging high interest rates despite the Legislature’s crackdown this spring on Oregon’s thriving payday loan industry.
Any lender charging 250 percent to more than 500 percent annual interest "is a predatory lender," he said. "You cannot and should not do that to people."
The governor made his comments during a Portland news conference to announce a campaign by Oregon credit unions to offer residents payday-type loans at low interest rates.
Payday lenders commonly charge 520 percent annual interest on short-term two-week loans, while credit union rates range from 12 percent to 19 percent. A typical $200 30-day loan would cost between $60 to $85 from a payday lender, but only $3 from a credit union.
Information on the 23 credit unions offering payday-type loans is available by calling 1-800-Safenet (723-3638) or on the Web.
The Legislature passed a law in April limiting payday loan charges to $10 per $100 on the original loan and no more than 36 percent annual interest on any extensions or roll-overs.
But the law does not take effect for another year. And it does not apply to car title lenders, check cashing stores or to consumer lenders with conventional licenses that allow them to make installment loans extending beyond 60 days. At least 66 of the state’s 363 payday loan stores have bought conventional licenses, which could allow them to restructure loans at high interest rates without being affected by the new law.
"I can guarantee you we are going to close that loophole," Kulongoski said.
He said he will take either administrative action through the Department of Consumer and Business Services or push legislation to cap interest rates on conventional lenders, check cashing stores and car title lenders.
Ron Saxton, the Republican challenger for governor, won’t try to change the Legislature’s payday loan reform law, but he has not determined whether he would take further action, said Felix Schein, his campaign spokesman.
"Ron is less eager to regulate business than the governor," Schein said. "The goal is to both meet consumer demand and protect consumers from abuses, and there is a fine line.... Excluding a significant part of the population from obtaining a line of credit should not be the goal."
Payday Loan Fairness: [x] Yes, [] No
©2006 Our Oregon. All rights reserved. Photos by Leah Nash.