Eugene, Springfield and other cities in Oregon should follow the lead of the city of Portland in regulating payday loans, urges an editorial in the Eugene Register-Guard.

The newspaper calls on state and county governments to control the industry, saying that it is not a municipal responsibility. But House Republican leaders killed a bill last year that would have reduced the interest rates that lenders charge and made other important changes.

Last Wednesday, the Portland City Council approved an ordinance that partially fills the void left by the state government. There are no strict regulations on Oregon payday loan companies statewide, one of the few states that can make such a dubious claim. City officials in the localities of Gresham and Troutdale are expected to vote on similar meaures next month.

The paper urges Eugene, Springfield and other communities to protect the many Oregonians who are charged excessive APRs (annual percentage rates) for their cash loans.

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Portland City Commissioners passed the first ordinance in the state this week to protect consumers from some of the lending practices of payday loan businesses. This comes on the heels of recent state legislature criticism on the matter.

A no faxing payday loan can allow people with bad credit to deal with unexpected bills. But a lack of regulation means interest rates on some loans can be astronomical.

Mayor Tom Potter says that, while Portland City cannot cap interest rates, the new ordinance gives consumers 24 hours to cancel a loan, as well as the right to pay down principle and make installment payments.

"I think when you charge 912.5 percent interest annually, that's unconscionable," Potter said. "And I think that our society has to wake up and realize that there are some things that are just unacceptable. And this is one of those things."

Gresham, Troutdale and Eugene are considering similar ordinances - but Oregon remains one of only seven states with no interest rate limit on instant payday loans.

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.

The AP reports that community activists, union leaders and church groups are banding together to promote a measure for November's ballot to limit the loan rates charged by payday lenders throughout Oregon.

The payday loan industry has been growing rapidly. But unlike other states that have been trying to outlaw these cash advances entirely, backers of the Oregon initiative are just looking to protect people from lenders who at times charge more than 500 percent interest.

To help bring about such a change, the Our Oregon coalition is teaming up with the main state chapter of the Service Employees International Union, Ecumenical Ministries of Oregon, the Oregon Food Bank and other groups to place the measure before voters this fall.

“We're going to have a huge volunteer program on this. People are very excited about it,�? said Patty Wentz of the Our Oregon coalition, which filed the initiative to cap most payday loan annual interest rates at 36 percent and loan origination fees at 10 percent.

The coming ballot measure campaign will mark a resumption of a fight that took place during the 2005 Oregon Legislature when a bill to limit interest rates on payday loans was approved by the Democrat-controlled Senate but died in the Republican-controlled House.

House Republican leaders have since appointed an interim committee to study the payday loan issue, but Wentz said advocates of interest rate caps on payday loans aren't going to wait for the 2007 Legislature to act.

“People were frustrated that reform that was so badly needed was thwarted by the House leadership because the payday loan industry has such great sway there,�? she said.

Any effort to cap interest rates likely will spark strong opposition from payday loan industry officials who say that the quick loan shops sometimes are the only source for a small, short-term payday cash advance for people who run into financial emergencies.

“It's a matter of consumer choice. This is a convenient way for people to get access to cash,�? said Annette Price, a lobbyist for the payday loan industry in Oregon.

But Ellen Lowe, a lobbyist who's worked with church groups over the years on social justice issues, said the high interest rates charged by payday lenders can victimize consumers who often end up even deeper in debt.

Art Powers, political director of SEIU Local 503, said the public employee union plans to take an active role in helping to win voter approval of the interest rate cap measure this fall.

Backers of the measure aren't trying to drive shops offering instant payday loans out of business, Powers said.

“But the idea that payday loan operations can charge 500 percent interest is outrageous,�? he said. “A lot of people are living on the edge, and some people get so desperate that they mistakenly see these loans as a lifeline.�?

As we've reported earlier, it can be difficult for payday loan legislation to pass. We'll follow this story as it develops.

South Eugene, OR — Friday night, members of the Eugene-Springfield Solidarity Network gathered outside the Eugene Emerald's game to protest the payday loan industry. Pickets told people to be aware of the high costs associated with this type of loan.

What sparked the demonstration were the magnets that were given out to baseball fans at the EM's game. On it is a small logo for Check-Into-Cash, a loan center that helped sponsor the giveaways.

Members of the Solidarity Network say the interest rates on these types of loans are too high and that they take advantage of low-income workers who are desperate for cash. "They're not a good neighbor, they're not an asset to our community at all, we don't feel. A $300 no fax cash loan can rollover to $180 or more in fees," John Evans with the Eugene-Springfield Solidarity Network said.

Salem, OR — Representative Betty Komp (D-Woodburn) fought for a vote Tuesday on a bill that would have set rules in Oregon's presently unregulated payday-loan industry, protecting consumers from extremely high interest rates and what she calls "predatory lending practices," but the majority Republicans killed the effort on a party-line vote.

Senate Bill 545, which passed the Senate earlier this session, would have set a limit on the interest and fees that a lender may charge for payday loans — a limit where none now exists. The bill would have established a maximum of $15 for every $100 borrowed for the first loan, and $10 per hundred for each renewal loan.

The bill also would have set a 31-day term for payday advances, and would have required that the borrower pay a quarter of the principal for each renewal, up to a maximum of three loans. Komp noted that the permissible annualized interest rate allowed by SB 545 is still more than 390% APR.

The requirement for payment of 25 percent of the outstanding principal before the loan can be renewed reduces the probability that a low-income borrower would fall into a "bottomless pit of debt," Komp explained.

Angered by insinuations that some lawmakers have been bought off with campaign contributions from the payday loan industry, an Oregon House committee chairman says he is going to shelve a bill that would cap rates charged by payday loan shops.

“The bill’s dead,'’ Rep. Wayne Krieger said last wast week after his committee canceled a public hearing on the Senate-passed bill to limit interest on the short-term payday loans to 15 percent.

Krieger and other Republicans are upset because a campaign finance watchdog group this past week released figures showing that payday loan agencies and other financial groups opposing the bill contributed nearly $150,000 last fall to legislative candidates.