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Senate OKs new payday-like loan

Post by Jimmy Lovaas / The News Tribune on Feb. 21, 2013 at 12:26 am with No Comments »
February 21, 2013 10:10 am

Controversial legislation proposing a new type of ultra high-interest loan was fast tracked to the Senate floor today. In an unusual twist, one of the bill’s cosponsors, Sen. Nick Harper, D-Everett, even voted against it. It passed anyway, 30-to-18.

Harper said he didn’t understand why the bill, which would allow installment loans with effective interest rates nearing 220 percent, was being rushed to a vote when it still needed work. He said sending the bill to the House to get “fixed” was just “punting the ball.”

The move also started a 30-minute floor fight with vocal payday loan critic, Sen. Sharon Nelson, D-Maury Island. Nelson offered up 14 amendments to the bill that would have slashed the effective interest rates down to around 45 percent or less.

“I’m ashamed of what happened here today,” Nelson said. “They had told people here that this was a 36 percent [interest rate loan] product. And that’s a sham. A flat out sham when you take a look at the calculations.”

Nelson said the talk about fixing the bill is also a sham.

All but one of Nelson’s amendments failed – the only one approved requiring lenders tell borrowers that the loans should only be used for short-term cash needs. Nelson acknowledged that amendment has little or no impact.

“Basically, I don’t believe that the payday lenders who are behind this are going to accept the other amendments,” Nelson said. “The work will not get done. The only working-over is going to be on the poor if this product moves forward.”

The bill is now headed for the House Business & Financial Services Committee chaired by Rep. Steve Kirby, D-Tacoma.

Kirby said his committee will do some work on the bill, but also said he’s hesitant to change it too much from the Senate version. He said he thinks the committee will likely pass some version of the bill.

Kirby said he planned to look at Nelson’s amendments and would consider them.

“We’re going to have sideboards on it,” Kirby said. “You won’t get yourself in trouble. If you do, you’ll have to do it on purpose.”

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