Payday lenders speak out against interest rate cap
on May 21, 2007 at 12:13 PM, updated May 21, 2007 at 12:16 PM
Payday and car title lenders turned out in force early Monday morning to tell a Senate committee why they oppose a bill that would put a 36-percent limit on consumer loans under $50,000.
“Thirty-six percent won’t work,” said Osjha Anderson of Atlanta, a lobbyist indicating Georgia-based Northwestern Title Loans, which operates 16 car title stores in Oregon. “We will be gone. We’re not blubbering wolf. You will shut this industry down.”
People packed a Capitol hearing room and spilled out into the lobby to gather around television monitors during the hourlong public hearing, which began at 7:30 a.m. Many of them sported fluorescent green stickers that said “I Choose Payday Advance.” The Senate Commerce Committee will have a work session on the bill May 30.
House Bill 2871, which was approved by the House, is aimed at closing loopholes that payday and car title lenders might use to proceed charging triple-digit interest rates, despite a 36 percent cap passed by the Legislature a year ago. Oregon’s 360 payday lenders on average charge 528 percent annual interest on petite, short-term loans, typically for about $300 over two weeks.
Church representatives, food bank operators, consumer advocates, the Oregon Law Center and a lobbyist for the AARP of Oregon, the powerful retiree’s group, testified in support of the bill. Three out of four members of AARP support the bill, said Rick Bennett, the group’s lobbyist.
Jonas Monast, a lobbyist for the Center for Responsible Lending in Durham, N.C., said low-income residents with poor credit would still have access to petite loans even if payday and car title lenders left the state. After payday lenders left North Carolina, he said, business doubled for traditional consumer lenders. Petite loans are still available to people in the 34 states that have capped interest rates, in most cases at 36 percent annual interest, he said.
Most conventional lenders in Oregon, however, oppose the cap. It unnecessarily puts conventional lenders at a disadvantage with banks and credit unions that are strapped by less limitary federal regulations, said Paul Cosgrove, a lobbyist for the Oregon Financial Services Assoc. The group represents conventional consumer lenders, which make installment loans of two months or longer, unlike short-term payday loans.
Pam Sessions, who runs a payday-lending store in Roseburg, said she supports a family of seven, including a disabled hubby, and would face a 72 percent reduction in revenue under the 36 percent limit.