Every year at least one bill is introduced in the Washington State Legislature to cap payday lending rates somewhere short of the 391% annualized rate currently charged. And every year, due to a total lack of support by Republicans, and aggressive opposition from key, payday-industry-captive Democrats, the bill fails.
Yet Illinois — yes, famously corrupt Illinois — doesn’t seem to have the same problem reigning in legalized loansharking:
Payday loan predators have peddled consumer installment loans with interest rates which have averaged 341% in Illinois, but have also reached 1,000%. Under the new law, rates on consumer installment loans will be capped at 99% for loans $4,000 and less and 36% for loans greater than $4,000.
A few years ago, when a 99% top rate was floated here in WA as a compromise between the 391% currently charged and the 36% rate reformers had proposed, opponents screamed that it would be industry killer. Makes you wonder… if an industry can’t get by charging 99% interest, perhaps it shouldn’t exist?
Meanwhile, all reformers managed to squeeze out of the WA legislature was a law limiting customers to eight loans in a 12-month period, a measure intended to prevent borrowers from having their debt snowball indefinitely. Yet the industry quickly managed to run around even this modest reform.
You’d think Washington could do better in defense of some of our most vulnerable citizens.