Monday, March 6, 2006

The Washington State Legislature is rebuffing efforts by the military and consumer advocates to impose tighter regulations on payday loan firms, according to today's Tacoma News-Tribune. Fifteen bills aimed at payday cash loan regulation have been killed by lawmakers, now in the final week of their 2006 session.

“There were more editorials, more news reports about predatory lending and what it’s doing, yet there’s a group of people who don’t believe there’s a problem,�? said Rep. Sherry Appleton, a Democrat who has sponsored five of the regulatory bills.

Backers cite the 60-day legislative session's tight deadlines, along with backroom squabbling and the political weight leveraged by the lenders.

The U.S. Department of Defense, which has targeted the payday industry as an issue states should better regulate, asked the Washington State Legislature to cap payday loans at 36 percent and give borrowers more time to repay the loans. Presently, a $500 two-week payday loans carry a 390 percent APR. Military officials say this affects military readiness, as service members have been pulled from deployments due to unpaid loans.

Moneytree is a big local player in the industry, and also has contributed significantly to legislative campaigns. The company's president, Dennis Bassford, said last month that the bills would kill his industry and take away a quick payday cash advance option for people who need it. There are more than 700 faxless payday loan stores in Washington, with 30 situated around military installations.

Since the Legislature seems unprepared to act, the military is looking into other ways to protect service members. Such as setting its own rules to make the payday loan stores off-limits to members. There are unproven claims that stores have violated Washington’s Military Best Practices Act by calling sailors at all hours and contacting their supervisors.

“We are working with the egregious payday lenders to try to get them to cease and desist from these tactics,�? he said.

Military and consumer advocates say lawmakers ignore the public by bowing to powerful political pressure from the lending industry. Payday loan enterprises contributed nearly $200,000 to the State Legislature in 2004, according to state Public Disclosure Commission records. Lawmakers say there is no connection between campaign contributions and how policies are made in Olympia.

Rep. Steve Kirby, a House committee chairman who got a $500 contribution from Moneytree, said he wouldn’t advance bills that are designed to run a business out of the state. However, the Tacoma Democrat was upset that consumer groups never included him or committee members in drafting or sponsoring bills.

“We lost a year because the advocates work with anyone except those who sit on the committee,�? Kirby said.

The Legislature passed measures to regulate the payday loan industry a few years ago, including a payday loan cap of $700, the APR of 390 percent and a term of no more than 45 days. Despite these current setbacks, those in favor of increased Washington payday loan restrictions vow to carry on that fight.

“We will still keep working with the military and address that issue,�? said Frank Chopp, a Seattle Democrat.

This entry was posted on Monday, March 6th, 2006 at 1:00 pm and is filed under Washington.