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We owe more thought to payday loan issue

July 6, 2006 - Salem, Oregon

In recent news on the misguided attempt of Portland, Gresham, Troutdale, Silverton and now Beaverton to regulate the terribly misunderstood and wrongly maligned payday loan industry, Beaverton City Councilor Dennis Doyle, however well-intentioned, makes some statements that highlight the gross ignorance that clouds this issue.

First, he seems to feel that legislating these "predators" is necessary for the city's welfare: "I'm glad the council took this one on. It's essential that we get this done."

And, he adds, "This gives immediate relief."

What relief? The proposed regulation that seems destined for passage at the council's meeting on Monday does absolutely nothing for citizen-borrowers that the practices of the industry don't already provide. It is one of the most powerful examples of bureaucratic prejudice, ignorance and waste of time (at taxpayer expense) that I have witnessed in my 66 years as a resident of Oregon. It's virtually all "sound and fury, signifying nothing."

For example:

The mandatory 24-hour right of rescission has always been part of most lender contracts, and, as one could imagine, is hardly ever exercised by the consumer.

The mandatory two-month payment plan for debtors who have run out of rollover options has also been a common, alternative "soft landing" offered voluntarily by the industry. Furthermore, it is the practice of lenders not to add any interest during the extended repayment period.

The mandatory payment of 25 percent of the principal, plus accrued interest, before rolling over a loan, will force some consumers who simply don't have the 25 percent in their pockets to take out another loan from a different lender. Certainly no relief there -- just another hassle for the borrower to deal with!

Thanks, but no thanks, Councilor Doyle.

Doyle wrongly contends that Oregon is "one of a handful of states that don't control quick-loan companies." Apparently, he is unaware that the Oregon Division of Finance and Corporate Securities has regulated the industry for many years.

He objects to interest rates much higher than those charged at other lending institutions, saying he'd like to see more banks and credit unions stepping up to help people with a short-term need.

Apparently, Doyle doesn't know that traditional lending institutions do offer such loans, some charging interest at rates ranging from 104 percent to 3,650 percent APR, depending on how much time expires before repayment of the loan.

I can only hope that Beaverton will take the smart road and reject the ordinance and avoid squandering more of our precious, limited taxpayer money -- money that could have been saved with a little homework and forethought.

I can only hope that the city will then engage in thoughtful discussions with the payday lending industry itself, rather than with the industry's misguided detractors (well-intentioned do-gooders, no doubt) from the social services sector.

I hope the city will wake up before Monday from their state of confusion and ignorance on this matter and choose to let this proposal die before it takes on an ignominious life of its own.

In the future, I hope to see Dennis the Menace at his pranks only in the funnies . . . and no longer up to his funny business, however well-intentioned, in the halls of Beaverton City Council.

J. Allen Green of Beaverton is a vendor who supplies ATM terminals to locations that include payday loan outlets. A veteran businessman who describes himself as a "lover of free enterprise," he says those who offer payday loans are "some of the finest people I've met."

News Source

The Oregonian, J. Allen Green, Editorial

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