For years religious groups and consumer advocates have spoken out against predatory lending in Oregon. The Rev. Dr. Dan Bryant and David Leslie, both with Ecumenical Ministries of Oregon, wrote in 2005 that:
The payday lending and tax refund loan business has exploded in Oregon. On many street corners, new businesses are opening up to serve the many Oregonians living paycheck to paycheck. In fact, there are now more payday lending businesses in Oregon than McDonald’s. Sadly, this explosion is fueled by the fact that lenders can charge fees that often exceed 300 percent interest.
Who uses these loans? People in financial crisis. They are the working poor, students and seniors on fixed incomes. They need quick money to pay bills, medical expenses, food or rent. These loans provide an important service. However, excessive fees amount to usury when recipients are economically disadvantaged with few options. Profiting from others’ misfortunes is a moral concern to many in the religious community and should be concern for all.
Houses of worship and charities have seen an increase of people victimized by payday loans. This is why the religious community filled a hearing room last month to support a bill in the Oregon Legislature to create consumer protections. One pastor told the story of a parishioner whose total fees amounted to an annual interest rate of 729 percent. The terms of the loan of did not permit any partial payments except for the full amount plus the fees. She had no choice but to incur more fees when she could not make the payment in full. Emergency food service providers told of clients getting evicted from their homes as a result of this financial trap.
Finally, after years of hard work, the Oregon Legislature enacted a new law that caps such loans at 36%. Businesses that profit from exploiting people in difficult situations cannot stand the thought of the state cutting into their ill-gotten profit margin and are fighting the new law in court. But a judge this week refused to support an injunction against the law and so it goes into effect this Sunday.
This is a good day for Oregon and a real victory for those who fight for economic justice.