Payday loan law talks nixed

Just an interesting follow-up to the payday loan piece below.

Published Aug. 11, 2006, in the Keizertimes

A discussion about payday loan regulation ended before it got started Monday when the Keizer City Council opted not to debate a local ordinance placing greater restrictions on short-term loan businesses.

The short discussion of the issue ended in a 5-2 vote against taking a more extensive look at local payday loan reform within city limits.

Councilor Chuck Lee had proposed that the council examine the issue. At a city council meeting last month, he distributed related materials to councilors, as well as a copy of a similar ordinance passed by several other Oregon cities.

However, when he raised the issue again at the council's Aug. 7 meeting, other city councilors were not receptive.

"It's a waste of staff time," said Councilor Troy Nichols. "The state Legislature just stepped up in April and enacted some of the strictest legislation out there for payday loan businesses, and it's going into effect in a couple of months. This doesn't rise to the level of necessity."

Lee countered that the legislation would not be enacted until July 2007, nearly a year from now.

"It's legislation that has already been prepared and passed by other cities, and I don't think it would take a tremendous amount of city staff time to prepare an ordinance for us to debate," Lee said.

The payday loan ordinance Lee had in mind would be companion legislation to the state law that goes into effect next year.

The state legislation will limit fees on the loans to $10 per $100, restrict interest rates to 36 percent annually, prohibit the loan business from rolling over the debts more than twice, and require a minimum of 31 days for repayment on any payday loan.

The local ordinance would have barred interest-only rollover and required a payment on the principle amount of the loan each time a loan is rolled. It also would have required payday loan businesses to offer 60-day repayment plans to any borrower, and required such businesses to offer a 24-hour right to cancel.

Councilor Jacque Moir said she didn't support further debate because enforcing such laws would fall to the Keizer Police Department.

Nichols also said it is unfair to apply annual percentage rates to loans that are only taken out for 30 days. Proponents of payday loan reform point to APRs of more than 500 percent as one reasons justifying reforms.

Mayor Lore Christopher she would withhold her support for an ordinance because of the appearance of politicking, suggesting Lee brought up the issue to aid in his campaign for a state Legislature seat.

Lee, a Keizer Democrat, is challenging Rep. Kim Thatcher (R-Keizer) for the District 25 seat in the November election.

Lee told the councilors he felt they were rushing to judgment.

"If there's anything we can do to help protect the people in our community it's time well spent," he said.

Councilor Richard Walsh casted the only other vote in favor of pursing the payday loan discussion.