Op-Ed- Payday Loan Companies Should be Regulated

A senior citizen who took out a $100 payday loan for orthopedic shoes ended up having to pay back $900, that is an utterly shameful fact to have to report.

Carpetbaggers, By: N. C. Wyeth Image Courtesy: sandiego.edu

(Salem) - One of Oregon`s fastest growing industries, payday loan companies, remind me of what I have read of a period long ago, after the end of the Civil War. People in the south were destitute after the hostilities ceased and that`s when the carpetbaggers moved in. They took advantage of every weakness and milked and manipulated that last of the little that people had been able to save. Sure the people being run off their property were debtors, maybe even former slave owners, but that still gives no one a right to levy fines and interest levels that a poor person could never begin to pay. Here we are today in Oregon, and thanks to research from The Oregon Food Bank, we learn that payday loan companies are having a real field day. They typically make a loan, and then charge a huge interest rate. If people even slightly default, the numbers skyrocket. How can that happen you ask? Because Oregon is one of seven states without a cap on interest rates, that`s how. That might account for the value of payday loans in Oregon increasing 291% between 1999, rising to $249 million in loans in 2004. That might also explain the extraordinary number of homeless people buzzing around down on Front Street by the Mission. Poor people are on the hit list by an industry without mercy. Does it get worse? Yeah, plenty worse. Today in Oregon there are more payday loan companies than McDonald`s restaurants, and that`s not because Ronald doesn`t get around. Oregon`s economy is sagging, people keep running up their credit cards, taking a hit here, taking an overdraft charge there, and making it work, but for how long? Then they turn to a payday loan company. If their employer doesn`t cut a check when they`re supposed to, and that does happen to people, especially in the buliding trades, then they`re up a creek without a paddle. A number of groups are banding together in Portland Wednesday night at a hearing. Portland`s City Commissioner Dan Salzman has proposed a city ordinance to provide basic protections for payday loan consumers. The ordinance would provide: The right to cancel a loan within 24 hours The right to pay down the principal with each loan renewal The right to make installment payments after two loan renewals Among those testifying is a senior citizen who took out a payday loan for $100 to pay for orthopedic shoes, and ended up having to pay back $900. That is an utterly shameful fact to have to report. Advocates for payday loan regulations include religious leaders, former payday loan customers, emergency food providers, Ecumenical Ministries of Oregon, Children First for Oregon, AARP Oregon, Oregon Catholic Conference, Oregon Hunger Relief Task Force, Oregon Food Bank, Oregon Consumer League, National Association of Social Workers, Oregon Law Center, OSPIRG and many others. The groups represent working families just trying to pay their bills who deserve laws to protect them for exorbitant interest rates and fees. They say that under current regulations, payday loans function as chronic debt instead of helpful credit. I hope local elected officials and state officials pay attention to what happens in Portland and take the lead in regulating the profits of these predatory lending groups that are making too large a sum off the backs of those with the very least.