Merkley calls for 36% interest cap; hearing underway (with live-blogging!)

This morning, Speaker Jeff Merkley called on his fellow legislators to enact a permanent 36% cap on interest rates for all loans.

House Speaker Jeff Merkley (D-Portland) today encouraged his colleagues to enact a bill that would place a 36 percent annual interest rate cap on all consumer finance loans in Oregon. Merkley is the chief sponsor of HB 2871, which closes loopholes in Oregon law that allow predatory lenders, such as payday loan shops and car title lenders, to avoid regulation and charge interest rates of up to 500 percent.

There is already a 36% cap on some short-term loans, enacted in special session last summer, but the loopholes were immediately exploited. From his statement:

Last spring during a special session of the Oregon legislature, the House and Senate passed a 36 percent annual interest rate cap on short-term payday loans. Almost immediately, those lenders began to reorganize under the state’s conventional lending laws to avoid that cap. A typical 60-day loan subject to the 36 percent cap could now be offered without that cap if the lenders simply converted it to term of 180 days or more. ...

“No state has been successful in capping interest and fees for only one type of lender without leaving huge loopholes that are immediately exploited,” Merkley said. “Our answer is to put a 36 percent cap on the whole consumer lending industry to make sure they can’t do that here.”

The hearing on HB 2871 starts at 1 p.m. in the House Consumer Protection Committee. Learn more about HB 2871 at Our Oregon.

Advocates from Our Oregon will be live-blogging the hearing here. Discuss over there.

March 28, 2007 Posted in in the news 2007.