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Governor sets the bar.

Byline: The Register-Guard

About a week remains until the Oregon Legislature meets in special session. If House Speaker Karen Minnis were to take out a payday loan in Lane County for that period, she would have to pay an annual interest rate of up to 886 percent, according to a new survey. And that doesn't count rollover fees of up to $94.50 if she doesn't pay up on time.

Minnis should keep those numbers in mind when she introduces her proposal to regulate Oregon's rapacious payday loan industry. She should also reflect on recent polling that shows overwhelming support among Oregon voters for tough restrictions on that legalized form of loan sharking known as payday loans.

Gov. Ted Kulongoski is familiar with those numbers. That's why he rightly cautioned Minnis this week that he will refuse to sign any bill that imposes regulations weaker than the rigorous requirements contained in an initiative that's proposed for the November ballot.

Kulongoski is aware of some other important numbers, as well: 545 and 150,000. The former is the number assigned in the last session to the Senate's payday reform bill that Minnis squelched in the House. The latter is the amount of money that payday lenders and other financial groups opposed to the bill contributed to lawmakers - the bulk of it going to Republicans, including Min- nis.

Now, Minnis insists she's ready to regulate the payday loan industry and that it's a top priority in the upcoming special session. That conversion on the road to Salem was no doubt due in part to pressure from Rob Brading, a Democrat challenger for her House seat in the fall who has been championing payday re- form.

But Minnis' history of defending the payday industry suggests that she may also be interested in pre-empting the initiative effort by passing a weaker state law - and also block Oregon cities from adopting their own payday regulations. (Portland, Gresham and Troutdale already have passed such ordinances, and Eugene is among a growing number of cities considering doing the same.)

That's why Kulongoski's decision to set a high bar on payday reform is an important and appropriate move. If Minnis has any hopes of the governor signing a reform bill into law, she must now make certain its provisions are as tough as those contained in the initiative proposal. In practical terms, that means her bill must cap the interest rate for payday loans at no higher than 36 percent, limit origination fees to no more than 10 percent of the loan amount, limit the number of loan rollovers to no more than two and set minimum loan terms of no fewer than 31 days.

Those are demanding but not unreasonable restrictions on an industry that, despite its protestations, has thrived in other states where similar constraints are already in place. Oregon is one of only 16 states that currently impose no meaningful limits on the payday loan industry.

A new survey by the Oregon Student Public Interest Research Group of payday businesses in Lane County underscores the need for regulating this booming industry. It found that the most common annual interest rate locally is 521 percent.

With appalling terms such as that, it's hardly surprising that charities, food banks and houses of worship across the state have reported an increase in the number of desperate people who have been victimized by the payday industry. Yet the Legislature has refused time and again to intercede on behalf of the state's poorest and neediest citizens.

That's why citizens groups are gathering signatures to put the payday loan initiative on the fall ballot. And that's why cities are enacting their own regulations.

Minnis wants Oregonians to believe that she's now serious about regulating the same industry she's protected so assiduously in the past. That's hard to believe. But she can prove doubters wrong by passing a bill that meets Kulongoski's re- quirements.

Until that happens, no one should wait on the Legislature.
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Title Annotation:Editorials; Minnis' payday loan limits must match initiative's
Publication:The Register-Guard (Eugene, OR)
Article Type:Editorial
Date:Apr 14, 2006
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