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

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.

Lamont February 21, 2013 (12:31 am)

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

ws_suzanne February 21, 2013 (1:35 am)

How do we stop this?

redblack February 21, 2013 (5:40 am)

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

CandrewB February 21, 2013 (5:49 am)

“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.

Mike February 21, 2013 (7:00 am)

@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.

Carol February 21, 2013 (7:18 am)

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.