Sunday, July 29, 2007

Payday Loans: A call for action

Oregon's governor and legislature have effectively cut the knees off of the usurious payday loan store industry.

A new law went into effect this month in Oregon which limits interest rates to 30 points above prime or roughly 36.5%. That's a far cry from the effective 520% gouge routinely charged by payday loan lenders.

According to the Portland Oregonian:

  • Since June 1 at least 60 payday loan stores have turned in their licenses.
  • Check 'n Go will close its 21 Oregon stores.
  • Advance America, the nation's largest payday loan company, is evaluating whether it can keep its 45 Oregon stores open.
  • Northwestern Title has stopped making car title loans in its 17 Oregon stores, which it is preparing to close.

  • Within the last year or so the city councils in Kenosha and Racine and the Pleasant Prairie Village Board acted to place geographical and other restrictions on "convenience cash" businesses but these actions, while commendable, amount to too little, too late.

    Pleasant Prairie Village Board President John Steinbrink said there's little interest in Madison to clamp down on this legalized loansharking.

    One reason for this may be that while no bank would get away with charging 520% interest, many commercial banks have behind-the-scenes financial arrangements with payday lenders.

    Another may be that the legislature and governor -- who has been conspicuous by his absence of leadership on this issue -- is so embroiled in political battles that they can't focus on what's in the best interests of the state.

    Oregon's law needs to become Wisconsin's law. Assemblyman John Steinbrink, who worked quickly to shepherd the Pleasant Prairie restrictions through the village board, could demonstrate real leadership by bringing this battle to the floor of the legislature.

    The time is now.

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