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| Pay Day Lenders on Notice in Washington |
| 2 January, 2007 |
More than a dozen lawmakers in Washington State are backing a plan to protect people from sky-high interest rates charged by some pay-day lenders.
They want to cap the interest rate at 36-percent for short-term loans.
Oregon passed a similar law in 2006, but it may not have solved the problem, as correspondent Cathy Duchamp explains.
Oregon 's law doesn't go into effect until July. But already, the pay day lending industry has changed.
And not in a good way, says Patty Wentz, with the group Our Oregon.
Patty Wentz: "The payday lenders did in Oregon the same thing they did in many other states, which is try to subvert the law that was passed and recharter themselves as a different kind of lender that will allow them to continue to charge their outrageous interest rates. In Oregon we had interest rates up to 528%."
Wentz says some lenders who face the 36-percent interest cap on 60-day loans have started offering 61-day loans to get around the law.
The bill Washington lawmakers will consider targets loans that are between 90 and 120 days. Payday lenders in both states say caps will drive them out of business.
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