Pridemore Proposes to Protect Proletariat from Predators

Article by fantasticforrest on February 14th, 2009 at 9:13 pm

There’s a real problem these days with predatory lending practices, and one local legislator, Senator Craig Pridemore, has sponsored a bill to address the issue.

I received an alert from FUSE which encourages folks to contact their legislators and convey this message:

Right now, Washington families are struggling to cope with the economic downturn, increased gas prices, and mortgage meltdown. At a time when every penny counts, we need our state lawmakers to take extra care to protect consumers.

However, our state law allows payday lenders to make small dollar loans with interest rates up to 2,700%. With 10,000 loans made every day in our state, payday lenders are stripping valuable resources out of the pockets of Washington families. Everyone in our state deserves reasonable consumer protections when they borrow money.

I urge you to protect consumers from dangerous payday loans.

VOTE YES on HB 1073/SB 5150 and HB 1709/SB 5750.

FUSE has provided some additional talking points, including:

Everyone deserves reasonable consumer protections when they borrow money. …payday lenders in Washington State make small dollar loans… to the tune of almost $200 million annually. These loans are designed with terms borrowers usually cannot meet, forcing them into high-cost, long-term debt. An average payday loan borrower repays $827 to borrow $339.

I see people out in the median on Mill Plain in Cascade Park waving big arrow signs pointing to the Payday Lender there.  I wonder how much they are charging borrowers, and how deeply into debt those people are sinking.  I’m glad this legislation is under consideration.  Kudos to Senator Pridemore for taking action on this.  I’m off to contact my representatives and senator!

Category: 17th Leg District, 18th Leg District, 49th Leg District, Economic justice |  Print This Post | Share/Save |

3 comments to Pridemore Proposes to Protect Proletariat from Predators

• John democracyforvancouver.org

  February 15, 2009 at 10:12 am · Reply to this comment

  Here is some info from Senator Pridemore’s site:

  Friday, February 06 2009 – Craig Pridemore

  OLYMPIA – People who take out payday loans would receive crucial protections under the Fair Payday Loan Act proposed today by Sen. Craig Pridemore, D-Vancouver.

  Pridemore’s Senate Bill 5750 would require payday lenders to give borrowers a minimum of 60 days to repay their loans without fear of additional fees during that period. The bill also limits the principal amount of a loan, and the outstanding balance of all loans made to a single borrower, to no more than $700.

  Under current law, borrowers must repay the loans within two weeks, and often they are forced to take out additional payday loans to repay the initial loan, incurring significant additional processing fees and increased interest. Under the Fair Payday Loan Act, borrowers who cannot repay their original loans within 60 days may enter into a payment plan of one month for every outstanding $100, instead of having to take out new loans with additional fees that further escalate their debt. Lenders would not be allowed to charge additional fees or interest as part of the change to the payment plan.

  “The goal of a short-term loan should be to get over a temporary hardship,” Pridemore said. “These loans have the effect of putting people in perpetual debt.

  “People who take out payday loans typically live pay check to pay check and are especially vulnerable to the high interest rates and loan processing fees charged by payday lenders.”

  “Before we legalized payday loans in 1995, this activity was considered loan sharking,” Pridemore said. “What we’ve done is we’ve legalized loan sharking. We didn’t mean to, but we did, and now we’ve got to fix it.”

  Pridemore credited the Statewide Poverty Action Network and Solid Ground for shaping the policy behind the Fair Payday Loan Act. “This is badly needed legislation, and those two groups did the heavy lifting to pull it together,” Pridemore said. “Now it’s our job to get it into law, so borrowers have some real protections.”

  Don’t see anything about interest rates. Anyone know if the legislature is going to limit the interest rates?

  • fantasticforrest halfirishrover.blogspot.com

    February 15, 2009 at 11:10 am · Reply to this comment

    There appear to be a few bills which focus on interest rates. There’s a news story in the Olympian which discusses them.

    Also, there’s this from The Columbian on February 2nd:

    “The goal for a short-term loan should be to get over temporary hardship. These loans have the effect of putting people in perpetual debt,” said Pridemore. He also is co-sponsoring legislation that would impose a 36-percent ceiling on annual payday loan interest rates.

• Antonio Hicks breakingfinancialnews.blogspot.com

  March 28, 2009 at 8:08 am · Reply to this comment

  Payday lenders are nearly eight times more concentrated in California’s African-American and Latino neighborhoods as compared to white neighborhoods, draining these communities of $247 million in payday loan fees according to new research from the Center for Responsible Lending (CRL: 28.23, -0.78, -2.69%). A disparity remains even after accounting for factors like income, poverty rates and education.