Standing Up for 600% Interest
Um…hi. Welcome to my first post on Blue Oregon. Let's all cooperate to make this as little like a "jumping in" ritual as possible.
The Oregonian - along with several other papers in the state feeding off the same report by Niki Sullivan – reported on a bill progressing out of the Senate Commerce Committee that will put a cap on the interest and fees that can be charged by payday loan outfits. According to the report(s), the cap formula would look like this:
"The bill would limit charges to $15 per $100 loaned, in addition to allowing consumers to enter a repayment plan if, after their second loan renewal, they are still unable to repay the balance."
Some additional provisions – and the bill's number (Senate Bill 545, for future reference) not included in Ms. Sullivan's report (tut-tut) appear in a separate Political Notebook filing also in the Oregonian:
"The bill also would prohibit fees other than interest, a fee for a dishonored check and the payment-plan fee."
On a fundamental level, I'm for any legislation designed to stop lenders from charging 300 to 600 percent interest. Since this bill just left committee, there's some of time examine the economics of this bill before it gets a vote in the full Senate – namely, the "right" of lenders to charge interest rates they believe match their exposure to risk – but the most interesting part of the article comes with opponent's arguments, essentially, for 300 to 600 percent interest.
The pick of the pair offered comes from Doug Whitsett (R – Klamath Falls), a Commerce Committee member. The Oregonian paraphrased his the reason for his "no" vote here:
The bill passed despite opposition from Sen. Doug Whitsett, R-Klamath Falls, who said he hadn't heard testimony from one person directly harmed by the high-interest loans."
Interesting angle…sleazy, but interesting. Why? A summary of a study posted on the History News Network's site points to reasons why low-income Americans ignore the polls:
"In 2000, low-income respondents were roughly 30 percent more likely than those in the middle- or top-income groups to say the election's outcome would have little or no impact on their lives.
The same study discovered that "…the voting rate among those at the bottom of the income ladder is only half that of those at the top." In light of that sense of futility at the process, the idea of low-income Oregonians heading to Salem to testify before a committee touches the realm of silly. And the matter turns darkly comical when you consider that these same people would be testifying to the effect that they've so boned their finances and were desperate (or gullible) enough to get taken by a payday loan shop.
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April 29, 2005 |
Jeff Bull | Comments (13 so far)
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Comments
Posted by: C2TBF | Apr 30, 2005 6:16:27 AM
How do you win the war on drugs? Legalize, regulate, and tax it. Same with prostitution. Same with loan sharking. It's better to have this stuff inside the system than outside it, and people have to learn for themselves to walk away from a bad deal at some point.
Posted by: Admiral Rusty Shackelford | May 2, 2005 3:51:52 PM
Sometimes the best thing already is- even if what is ain't very good.
Pass the law and the icky little loan shops go away, and then unregulatables, criminals, can move in.
Complete legislative idiots.
And this asinine blueoregon deal- "diversity of progressive voices" -that is at best Orwellian Doublespeak. Diversity of voices would include more than just "progressive" voices now wouldn't it? A KKK meeting has a diversity of white members.
How PROGRESSIVE. (you know this means "socialist" right? (and you know socialist means "communist" right?))
Posted by: Jeff Bull | May 2, 2005 4:12:20 PM
Hi Rusty. I see you followed me. Look at it this way: you can provide the diversity. But you've got to update your cliches: the "progressive=socialist=communist" line grows more stale and irrelevant by the year.
As to your comment - along with C2TBF's - there's nothing wrong with leaving this stuff inside the system: that's not the point. But the term "usury" surely hasn't lost its meaning. What justifies 300-600% interest? A deterrent effect? And what do these deeper holes mean in the context of the recently passed bankruptcy bill? Saying people shouldn't do it is not much of a defense: they do it regardless of the rates.
Posted by: yak | May 3, 2005 8:42:56 AM
most of these comments are so off the wall as to not even warrent a response.
all i have to say is, jeff, you missed a really important point. that article by "Niki" of the AP incorrectly states that SB 545 left conference with the 31 day loan term in tact. THIS IS NOT TRUE. whether it is a lie is another story. but at this point in my political life, i tend to want to call it a lie just to annoy people like rusty, who obvioulsy have no grip on reality.
the pay day loan business is in no danger of being relagated to criminals, because mostly criminals are already in charge of it and that was the point of the legislation. to assume otherwise is one of the absolute stupidest things i have heard in a long time.
sometimes navy types have a little too much water on the brain.
Posted by: Admiral Rusty Shackelford | May 3, 2005 9:56:59 AM
Progressives want to make the world a better place through government, but free enterprise gets in the way, so they forcibly restrict it. Then you have socialisim, but then other countries out compete you with their free markets and the innovations from an economic engine that produces greater wealth and military power. So you have to expand your ideals into a hegemic world paradigm, forcibly if need be. Now you have communisim.
Congragulations Yak, you have demonstrated your ability to stereotype individuals into neat little cubbyholed groups in your mind twice in one comment.
Posted by: yak | May 3, 2005 5:37:51 PM
rusty,
you are really off the wall!
i can't een begin to comment on your assertions as i'm not even sure what you are talking about.
socialism! ha! obviously you are NOT paying attention. the current climate of corporate welfare is what? free enterprise? pu-lease. listen, friend ole rusty bawlsack, i have been a free marketer, of Mises standing, since i could think. believe me, i am not fan of government regualtion.
but the current business and loan enviroment is hardly a free market. a free for all corporatism, yes, free market, no.
subsidies do not make a free market, right? so what in god's name are you talking about?
as far as pay day loans, you obviously have absolutely no clue what you're talking about. it is predatory lending, period. even worse, it is sanctioned by the state. it has nothing to do with free markets, it is about usury.
really, get a clue.
Posted by: Jeff Bull | May 4, 2005 8:58:55 AM
Yak: I made the point I made. I appreciate anything you provide to build on it. Ultimately, I view blogging as collaborative; getting a bunch of people to combine their knowledge is the only thing that makes the medium worth the bandwidth. So, thanks for chiming in.
As to Rusty, assuming he continues to visit, you'll grow to enjoy him as much I have over on my blog. I don't always think he makes sense - a feeling I'm sure he shares as often as not - but I learn from his perspective...if nothing else how his brain works, which provides invaluable insight into how some conservatives (though I believe he leans libertarian within that spectrum) perceive progressive politics.
Posted by: Gregor | May 5, 2005 9:05:50 AM
Methinks the Admiral has gone to the grog cabinet once too often. Socialism does not mean communism. I learned that in high school. It makes as much sense as smoking pot inevitably leads to heroin addiction. Nothing is inevitable.
Outrageous interest rates do nothing for the economy except generate more homeless and destitute. To absolve oneself of responsibility with the "profits make perfect" excuse is pretty lame. To stand up for these parasites and declare the market must be free is ludicrous. We have a representative form of government that should be "of the people, by the people and for the people." If it is not, then we are not well represented.
What bothers me the most about this is that these lender/loan sharks will make you and I, assuming you pay taxes, finance their loss with a write off because they made a bad loan to someone who certainly has no credit worthiness, and they will do it again and again to the same people, over and over.
A solution? Perhaps the lenders should offer credit for only a few things and then pay the money directly to the organization on behalf of the person requesting the loan, i.e. food, utilities and necessary medical services. If they did that, I could support them, otherwise they appear to be nothing less then parasites.
Posted by: Gregor | May 5, 2005 9:07:43 AM
Methinks the Admiral has gone to the grog cabinet once too often. Socialism does not mean communism. I learned that in high school. It makes as much sense as smoking pot inevitably leads to heroin addiction. Nothing is inevitable.
Outrageous interest rates do nothing for the economy except generate more homeless and destitute. To absolve oneself of responsibility with the "profits make perfect" excuse is pretty lame. To stand up for these parasites and declare the market must be free is ludicrous. We have a representative form of government that should be "of the people, by the people and for the people." If it is not, then we are not well represented.
What bothers me the most about this is that these lender/loan sharks will make you and I, assuming you pay taxes, finance their loss with a write off because they made a bad loan to someone who certainly has no credit worthiness, and they will do it again and again to the same people, over and over.
A solution? Perhaps the lenders should offer credit for only a few things and then pay the money directly to the organization on behalf of the person requesting the loan, i.e. food, utilities and necessary medical services. If they did that, I could support them, otherwise they appear to be nothing less then parasites.
Posted by: LT | Mar 1, 2006 6:44:36 PM
Jenni and all the rest of the Blue Oregonians following this issue:
did you by any chance seen KATU news this evening?
First the kicker story.
Then the interview with Peter Courtney actually talking to the camera saying a special session would only be a good idea IF all the votes were nailed down along with the process before the legislators came into session.
Then a shot of Minnis presiding and the reporter saying something about Minnis wanting "to vote on something to protect consumers from payday loans".
Is our Karen getting nervous about a payday loan backlash and realizing she doesn't have regal powers after all?
Posted by: Jenni Simonis | Mar 1, 2006 8:03:47 PM
LT--
Thanks for the heads up. We're busy cleaning house, so the TV's been Abby's all evening. As such, I didn't see it.
I think she is getting nervous. She's sent out a letter, a postcard, a "personal story and legislative report" (something like 16 pages, full color, glossy), has been out canvassing, etc.
Posted by: LT | Mar 1, 2006 10:13:16 PM
Glad to see Karen is getting nervous.
On another note, it turns out my Republican St. Senator was part of the committee which wrote the Legislative Explanation for Measure 86 putting the kicker in the Constitution. After finding that online, I sent it to my friend who is running against her.
If Karen starts to say "the voters have spoken" on anything, hit her with this statistic:
Ballot Measure 86
would permit the Legislative Assembly to determine the means by which "kicker" refunds are returned to taxpayers, to deduct administrative costs from refunds, to withhold refunds of very small ("de minimis") amounts and to offset a taxpayer's refund against outstanding liabilities owed by the taxpayer
Results: passed by TOTAL 898,793 550,304
STATE MEASURE NO. 1
Amends Constitution: Legislature Must Fund School Quality Goals Adequately; Report; Establish Grants
Passed by:
TOTAL 940,223 477,461
So, if Republicans want to use the "voters have spoken" rhetoric.............there were more who wanted adequately funded schools than wanted the kicker in the Constitution that year.
If someone has the time to look, there's all sorts of stuff online about the kicker. Legislative referral in 1979 (on the 1980 ballot) as nearly as I can make out--harder to find online resources about legislation before the 1990s.
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Posted by: Jenni S. | Apr 29, 2005 2:44:43 PM
The repayment plan option is a very good idea.
Right now they will garnish your check for the entire amount. That means for people who already are living paycheck to paycheck, two or more of their weekly paychecks would be gone to pay for the loan and all its associated fees.
Typically whatever the fee is (say $50 for $250), they'll charge you that when you get the loan and each subsequent week in which you have to renew the loan. Before you know it, the fees are more than the loan.