Payday Loan Times

Dan Saltzman is a Portland city commissioner and Jackie Dingfelder is a Democrat representing Portland in the Oregon House of Representatives. They responded harshly to the recent failed attempt by state legislators to curb interest rates on payday loans.

The following is an except of an editorial published in The Oregonian. (Bolds, italics and links were added by The Payday Loan Times staff.)

It is hard to miss the explosive growth of payday lending in Portland. On nearly every thoroughfare in our working-class neighborhoods, a payday loan shop offers quick cash advances … there are now more payday loan shops in the Portland area than Starbucks and 7-Elevens combined.

These no fax cash loan storefronts attract low-income workers who are struggling between paychecks to make ends meet. Frequently, however, taking a payday loan puts borrowers in much worse financial shape than before they took the loan.

Payday loans charge borrowers exorbitant fees and interest for loans of just a few short days at rates that commonly exceed 500 percent in annual interest. Soon these borrowers find themselves in a bottomless pit of debt, forced to choose between paying their loan fees and buying food.

Obviously, there is a demand for these lenders. Equally obviously, there is a need to level the playing field between the borrowers and the lenders. Some sense of fairness needs to be instilled in the payday lending industry.

In Oregon, payday loans are virtually unregulated by state law. Payday lenders face few regulations and no interest rate caps. A bill to provide meaningful statewide regulation, unfortunately, failed to pass the Legislature last year.

In the absence of significant state regulation, it has fallen to local governments to act to protect Portland's working families. The need for local regulation is critical to protecting the financial security of our working citizens struggling to lift their families out of poverty.

A proposed Portland ordinance would give borrowers a chance to end the cycle of debt that often occurs in payday loans. The ordinance would require payment of a portion of a loan's principal before the loan can be renewed. It would give borrowers the ability to rescind a payday loan within 24 hours, and it would give borrowers the ability to convert a payday loan into a payment plan.

While this ordinance is a necessary first step in providing regulation of the payday loan industry, the state Legislature must proceed with more stringent statewide regulations. The Legislature must take further action to cap interest rates so consumers throughout Oregon are protected from exorbitant interest rates.