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.
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