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Weekend payday-loan measure fails

September 2, 2006 - Sacramento, California

A measure to curb payday-loan industry practices that target the military collapsed in the Legislature after some key backers shunned its weakened form and an Oceanside state senator who served in the Marines refused pleas by Camp Pendleton officers to support a crackdown.

"I'm not sure how the breakdown occurred," said Assemblywoman Lori Saldaña, D-San Diego, who carried the bill. "It's unfortunate that these military families are still left unprotected."

The push for the bill was bolstered by examples of troops paying as much as 400 percent interest on loans.

The Senate rejected the legislation late Thursday night after Bill Morrow, R-Oceanside, teamed with Kevin Murray, D-Culver City, to object to the bill.

Under pressure from the payday-loan industry, AB 1965 had been significantly weakened by the time it reached the Senate. For one thing, the interest rate cap of 36 percent had been eliminated. That caused even some initial supporters to pull off the bill.

"At the end of the day we were opposing the bill because the protections were not sufficient for the military or others," said Paul Leonard, director of the Center for Responsible Lending. "Passing something weaker in California would undermine efforts to get stronger protections in Washington."

In Washington, Congress is considering imposing a 36 percent interest rate cap as part of a broad Department of Defense Appropriations measure. Final action is scheduled this month.

Saldaña said the looming legislation in Congress may have convinced some senators that they should wait. Saldaña said she will decide whether to reintroduce legislation after Congress acts.

Her measure was weakened in late August in a bid to save it from failing in the Assembly. By appeasing opponents, however, Saldaña lost crucial support.

Leonard issued a statement Wednesday saying the payday-loan industry had "sabotaged" the bill in the Assembly.

Top-ranking officers from all branches of the military, including Maj. Gen. Mike Lehnert based at Camp Pendleton, supported the initial legislation to rein in loan rates, provide those deployed overseas with more time to repay debts and bar companies from using insignias in advertising.

News Source

The Union-Tribune, Michael Gardner, Copley News Service

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