Thursday, May 25, 2007
Mevish Jaffer, contributing editor
A recent bill that calls for a 36 percent limit on consumer loans under $50,000 caused both payday loan and car title lenders to speak out and voice their opposition to a Senate committee on Monday morning. Osjha Anderson, lobbyist for Georgia-based Northwestern Title Loans, which operates a total of 16 car title stores in the state, voiced the fact that “thirty-six percent won’t work.” She went on to say that “we will be gone. We’re not crying wolf. You will shut this industry down.”
The Capitol hearing room harbored a full house around television monitors for the duration of the hour long public hearing. Several of those who were opposed to the new rate cap were wearing fluorescent green stickers with the statement, “I Choose Payday Advance” written out. The Senate Commerce Committee has plans for a work session to address the bill on May 30.
With the objective of closing certain loopholes that may allow payday and car title lenders to continue charging triple-digit interest rates, House Bill 2871 was approved in spite of a 36 percent cap passed by Legislature just one year ago. On average, Oregon’s 360 payday lenders typically charge 528 percent annual interest for small, short-term loans.
Several supporters testified on behalf of the fast cash advance bill including:
- Church representatives
- Food bank operators
- Consumer advocates
- Oregon Law Center
- Lobbyist for the AARP of Oregon
- The powerful retiree group
Rick Bennett, the group’s lobbyist added that three out of four members of the AARP are in full support of the bill.
A lobbyist for the Center of Responsible Lending in Durham, N.C., Jonas Monast spoke out saying that even if payday loan and car title lenders left the state, residents who qualify as low-income with poor credit standing would still be eligible and have access to small loans. He went on to say that following the departure of payday lenders in North Carolina, business doubled for traditional consumer lenders. According to Monast, those in the 34 states that have capped interest rates still have access to small loans as well as a 36 percent annual interest rate in most scenarios.
On the other side of the spectrum, we have the Oregon payday loan lenders , most of who oppose the cap. Lobbyist for the Oregon Financial Services Association, Paul Cosgrove feels that the cap is disadvantageous to traditional lenders versus other banks and credit unions that are imposed with far less restrictive federal regulations.
Supporter to a family of seven including a husband who is disabled, Pam Sessions runs a payday advance lending store in Roseburg. She said she would have to deal with a 72 percent reduction in revenue under the 36 percent limit, a huge cut for anyone, much less a large family.
