The Oregonian
Steve Mayes
June 7, 2006
OREGON CITY --City commissioners decided Monday to consider tighter regulations on payday loan companies.
The five-member commission directed City Manager Larry Patterson to prepare an ordinance based on one used by Portland, Gresham and Troutdale, and under consideration by Beaverton and Eugene.
The proposal would affect Oregon City’s five payday loan outlets and complement a state law that goes into effect next year. The city would require the lenders --who make short-term, high-interest loans --to offer payment plans and make it easier for cash-strapped borrowers to pay off their loans.
"It gives added protection to our most vulnerable citizens," Mayor Alice Norris said.
A hearing is tentatively scheduled for June 21.
The Oregon City ordinance would not affect title loan lenders, who accept automobile titles as collateral. Critics of payday lenders say that under current rules, loans may be repeatedly extended.
Borrowers find themselves in a squeeze, said Angela Martin of Our Oregon, a nonprofit group that focuses on tax and economic fairness issues. "It puts struggling families under more stress."
A borrower pays a fee to extend the loan, but the amount owed doesn’t decrease, Martin said. If a two-week loan is extended three times, the borrower pays an interest rate of 521 percent when figured on an annual basis, she said.
City regulation is irrelevant because the state law will kill the industry, said Luanne Stoltz of Community Financial Services Association of Oregon, an industry trade group. "You couldn’t make any money if you made a million loans."
In April, the Legislature passed a law that will cap interest rates at 36 percent annually, limit fees to $10 for each $100 borrowed, give customers at least 31 days to pay off loans and prohibit loans from being extended more than twice.
Payday Loan Fairness: [x] Yes, [] No
©2006 Our Oregon. All rights reserved. Photos by Leah Nash.