Regulate payday loans.

Byline: The Register-Guard

Eugene, Springfield and other cities across Oregon should follow the city of Portland's lead in regulating the legalized form of loan sharking known as payday loans.

Regulating a lucrative statewide industry that preys on vulnerable low-income Oregonians should be the job of the state Legislature, not a municipal responsibility. But House Republican leaders - indignant over allegations that, gasp, they'd been influenced by hefty campaign contributions from the payday loan industry - retaliated last year by smothering a bill that would have reduced the exorbitant interest rates that lenders charge and made other much-needed changes.

On Wednesday, the Portland City Council approved an ordinance that partially fills the void left by the Legislature's failure to remove Oregon from the short list of states that impose no significant limits on payday lenders. With city officials in Gresham and Troutdale expected to vote on similar ordinances next month, Eugene, Springfield and other communities across Lane County should also act to protect the many low-income Oregonians who are charged annual interest rates of more than 500 percent for short-term loans.

State law prevented Portland officials from limiting those exorbitant interest rates. However, the city's new law requires payday lenders to give borrowers a payment plan, without any financial penalty, when they have difficulty repaying loans. It also gives borrowers the right to cancel loans within 24 hours, and it bars lenders from rolling over loans before they've collected at least a fourth of the principal.

The limit on rollovers is by far the most significant provision. In- dustry officials argue that payday loans provide a valuable service to customers who prefer their convenience and speed. But many borrowers are in financial crises that involve basic expenses such as food, rent or health care. They're often unable to repay their unrealistically short-term loans on time and have to roll them over again and again.

The debt on such loans can be crushing. Payday lenders typically charge $20 for every $100 two-week loan - and the same for each of the three rollovers they're allowed to make under state law, which adds up to $80. On a loan of $300, that leaves borrowers in the often impossible position of having to pay $240 in interest alone.

Charities, food banks and houses of worship across the state have seen an influx of desperate Oregonians who have been victimized by an unregulated payday loan industry. As a result, organizations such as Ecumenical Ministries and the Oregon Food Bank are working to put a measure on the November ballot that would do what cities cannot legally do - impose reasonable limits on payday loan rates. The measure proposes reducing fees for most payday loans by 50 percent, limiting annual interest rates on extensions to 36 percent and requiring payday loan terms of at least 31 days - more than twice the current norm.

Until Oregon voters can approve such a measure - or until the Legislature can do its job of protecting it poorest and most vulnerable citizens by approving statewide limits (an interim House committee is considering legislation for the 2007 session, but Oregonians shouldn't hold their breath) - then Eugene, Springfield and other cities should follow Portland's bold lead.