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Industry to fight payday loan limits

April 22, 2006 - Salem, Oregon

Consumer activists scored a victory this week when they persuaded the Oregon Legislature to cap interest rates that lenders may charge for short-term payday loans.

However, the regulations don't take effect until July 2007, and payday loan industry representatives are planning to return to the Legislature next January to try to overturn the law they say will destroy a growing industry that provides a popular service.

Payday loan industry spokesman Mark Thompson said the regulations passed in Thursday's special session mainly because the loans had become "a very politicized issue in an election year."

"Our hope is that once the election passes, we will be able to revisit this with legislators with more thorough arguments and facts" when the 2007 Legislature convenes in January, Thompson said in an interview on Friday.

Consumer advocates, on the other hand, are prepared to defend the new law that they say will reduce "predatory" lending practices.

"We will be back next legislative session, too, to make sure that not one word of the reform act is changed," said Patty Wentz of the Our Oregon coalition.

The new state law mirrors a proposed initiative measure backed by the Our Oregon coalition. It limits annual interest to 36 percent, sets minimum loan periods at 31 days, bars lenders from making more than two rollovers or making new loans within seven days of a previous loan, and limits the fee on a bad check to $20.

Thompson said the new law will force out of business many payday loan shops which now are the only source of small, short-term cash advances for people with financial emergencies.

News Source

The Register-Guard, Brad Cain, AP Reporter

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