State Sen. Sharon Nelson decries ‘new payday-lending scheme’

February 21, 2013 at 12:10 am | In West Seattle news, West Seattle politics | 11 Comments

Four years ago, our area’s State Sen. Sharon Nelson (D-Maury Island) was hailed for successfully pushing payday-lending reform. Today, she issued a statement warning that a new bill, SB 5312, passed by the Senate, could bring back that type of high-interest loan:

The new payday-lending scheme that passed off the Senate floor today will ensure that middle class families and military personnel can once again be trapped in a spiral of debt.

In 2009, we passed payday lending reform. It put safeguards on a predatory lending product, allowing borrowers to make reasonable payments and not end up buried in high-interest loans.

But the payday industry is back, marketing this new consumer installment loan as having a ‘36 percent interest rate.’ In reality, these loans include massive fees and penalties that take the rate as high as 220 percent. As a former banker, I’m confident that if a money lender can’t make a profit at 45 percent interest, as allowed in existing law, they have a failed business model.

As a legislator, I am shocked that a majority of my colleagues in the Senate voted to sidestep effective protections for Washington families and instead put high-interest lenders back in charge of people’s lives.

The bill, which you can read in its entirety here, passed the State Senate 30-18 today. Its companion House Bill 1657 is still in committee.

11 Comments

  1. The interest rate cap should be 20%… anyone desperate enough to need a higher interest rate loan should get cut off…

    Comment by Lamont — 12:31 am February 21, 2013 #

  2. How do we stop this?

    Comment by ws_suzanne — 1:35 am February 21, 2013 #

  3. ever read the fine print for those western sky financial “loans?”
    .
    “The typical APR for a $10,000 loan is 89.95%.”
    .
    i guess the non-native american payday lenders need to keep up with the competition.

    Comment by redblack — 5:40 am February 21, 2013 #

  4. “As a legislator, I am shocked that a majority of my colleagues in the Senate voted to sidestep effective protections for Washington families and instead put high-interest lenders back in charge of people’s lives.”

    You shouldn’t be that shocked. Just take a look at all of your colleagues (at all levels of government) who have taken money from the owners of Moneytree:

    http://www.opensecrets.org/indivs/search.php?name=bassford&state=WA&zip=&employ=&cand=&c2012=Y&c2010=Y&c2008=Y&sort=N&capcode=5gg5c&submit=Submit+your+Donor+Query

    The Bassfords sure “believe” in a lot of politicians.

    Comment by CandrewB — 5:49 am February 21, 2013 #

  5. @redblack:

    Also from the fine print of those ads (and just confirmed by a loan calculator :) ), that $10,000 loan can be paid off in just 5 years with a monthly payment of $759.52. Legal loan sharks.

    Comment by Mike — 7:00 am February 21, 2013 #

  6. ws_suzanne and others who want to stop this, if you go to the “read in it’s entirety here” link, you’ll then find a link where you can oppose/support any new bill up for consideration. This is a brand new feature being tested out by our WA state gov’t and you just need to furnish your name, address and e-mail to register…it just took a minute.
    I think this is GREAT to be able to let our elected officials know our thoughts on what’s going on in Olympia.

    Comment by Carol — 7:18 am February 21, 2013 #

  7. Senator Nelson has always been one of the good guys! Thank you Sharon.

    Comment by work downtown — 7:27 am February 21, 2013 #

  8. Carol- thanks! What a great tool. Will use!

    Comment by Me mama — 8:39 am February 21, 2013 #

  9. Thank you, Senator Nelson! The fight against predatory lending continues.

    Comment by Marcee Stone-Vekich — 9:23 am February 21, 2013 #

  10. Capitalism is awesome!

    Comment by toodles — 12:39 pm February 21, 2013 #

  11. I don’t know the whole cast of sponsors, but with people like Rodney Tom and Pam Roach on the list I sure wouldn’t expect any good to come from it.

    Comment by nolongerusingthestreets — 8:26 pm February 21, 2013 #

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