Today the Oregon Senate approved a cap on all consumer loans under $50,000 at 30 points above the Fed Reserve's discount rate. It's already approved by the House with a minor difference to be ironed out before the Governor signs the bill and it goes into effect on July 1.
"Oregon families can breathe easier today," announced OR House Speaker Jeff Merkley in a media release, adding, in a somewhat tortured figure of speech, "The days of triple-digit interest rates on short-term loans are now numbered."
Not everyone greeted the news that Oregon consumers won't be lured into short-term loans at 528% interest with Merkley's enthusiasm, though:
The legislation will knock out all but about 20 of the 333 payday lending stores in Oregon, said Steven Hanson, president of Oak Brook Financial Corp., which operates 41 payday loan stores in Oregon.
"These politicians don't care about the small Oregon business owners and their employees who are going to be on the street," he said. "They ought to care about the consumers."
Yes, and the chains and manacles industry went into something of a slump after the Emancipation Proclamation, too, but everyone managed to get through it. And at least if Hanson's employees find themselves temporarily tapped out and go looking for a short-term loan to hold them over, they won't have to dodge come-ons from the shops that want 500% interest.
For several years, in fact, Oregon's "community charter" credit unions (the ones that serve a particular community rather than a particular membership group) have been offering payday loans--typically with consumer-protection measures like limits on the number of times a loan can be rolled over, limits on fees and interest, and limits on loan amount relative to the consumer's income level.
(Hanson's own regard for consumers--to the extent that he pulls them into small claims court at the rate of three per day--is itself the stuff of legend.)
The Oregonian's account added:
During a 40-minute debate over the usury bill on the Senate floor Wednesday, Republican opponents argued that the measure invited legal challenges, distorted market forces and unfairly singled out consumer lenders by not addressing fees charged by banks and credit unions.
"Let the market work," said Sen. Roger Beyer, R-Molalla.
So you can add that to your Republican lexicon: What the New Testament calls "usury," the Senate Republicans call "the undistorted free market at work." Hope that clears things up.