Rep. Nelson’s payday-lending bill signed: “We are thrilled”

That’s what 34th District Rep. Sharon Nelson‘s legislative assistant Joe Fitzgibbon just told WSB, when we called/e-mailed to check before publishing a news release announcing Governor Gregoire had signed her payday-lending bill (HB 1709; history, info, documents here). As we reported yesterday, with video, Rep. Nelson had told the 34th District Democrats on Wednesday night that she was waiting to hear if the governor would sign her bill in its entirety. Fitzgibbon just replied to our inquiry with, “In the end, she did sign the whole bill as it passed the Legislature, and we are thrilled.” Here’s the news release, which explains what the bill does:

>Rep. Sharon Nelson, D-Maury Island, praised Governor Gregoire for signing into law House Bill 1709, which provides protections for borrowers of payday loans.

“This bill provides new consumer protections for those borrowers who use payday loans,” said Rep. Nelson, the prime sponsor of HB 1709. “Payday lending can trap families into a cycle of debt if they are unable to repay the loan on their pay date. This legislation provides borrowers with a simple installment plan option if they cannot repay and gives them a pathway to pay off their loan.”

HB 1709 was the product of long negotiations between consumer advocates, payday lenders and members of the House Financial Institutions & Insurance Committee. It includes portions of other bills introduced by Rep. Steve Kirby, D-Tacoma, chair of Financial Institutions and Insurance, and Rep. Troy Kelley, D-Lakewood.

The law passed the House of Representatives by a vote of 84 to 10 before payday lenders sought, unsuccessfully, to amend the bill in the Senate.

“For years, every attempt to protect consumers when it comes to payday loans has been shot down,” Kelley said. “This new law is a huge step forward, and I am proud that we could work together and get it done for the working people of Washington.”

In addition to the installment plan, other provisions of the bill include capping the number of loans an individual can take at eight per year, establishing a minimum loan term of at least one of the borrowers’ pay periods and limiting the value of loans a single borrower can take at one time to $700 or 30 percent of the borrower’s income.

“These are common-sense protections for families who rely on small loans to get through a tough spot,” said Nelson of the regulations contained in the bill. “I am pleased that we passed legislation that will help keep working families from getting trapped in loans they can’t pay off and maintain their access to credit.”

The bill also contains provisions providing additional disclosure to consumers and creating a database for the Department of Financial Institutions to collect data on the use of payday loans.

PSPS May 15, 2009 (5:18 pm)

They should have simply shut down this legalized loan sharking as has already been done in other states.

Helpless Washingtonian May 16, 2009 (5:38 pm)

WOW! Thanks so much for helping me make my own choices. Us Washingtonians need the help of our govt officials to help protect us from services that they don’t agree with. I can’t believe the ignorance of the officials that spend so much of their time and our dollars fighting for futile legislation. They solved nothing for the consumer. They only stripped away an option. Imagine putting all of the energy that they put into this bill into better financial literacy in our schools. They could actually make an impact with legislation and give us tools vs. Taking away a tool.

Very Sad May 16, 2009 (8:28 pm)

I wonder why our legislators feel that it’s their job to limit consumer’s access to short-term credit. Do they really think the demand for the product will go away? Well, it won’t and now more credit unions and banks will get more overdraft fees and more people will be forced to the internet where there is no regulation and much higher fees. Maybe the next move will be to limit the number of hamburgers you can buy in a week or how many lottery tickets you can buy in a month or bottles of wine in a day. It amazes me that people who do not take advantage of short-term credit think that everyone who does is irresponsible. I don’t like where our state is headed.

Pay Day Lender May 18, 2009 (8:37 am)

The allegation that pay day loans trap families in a cycle of debtis not valid. Under our Best Practices, any customer who cannot payback their loan when due has the option of entering into an extended payment plan, allowing them to repay the loan over a period of additional weeks. This option is provided to customers for any reason and at no additional cost.

Sorry, comment time is over.