At Payday Lending Hearing, CUAO Reps Detail Credit Union Alternative Deals
In 2004, there were 734,000 payday loans in Oregon-an astonishing number for a state that ranked just 28th in the U.S. in population in the 2000 Census.
And it's anticipated that that figure will be even higher when 2005's data is released.
In response to concern over the explosion of payday lenders, the state's legislature has held hearings that included testimony from a representative of the Credit Union Association of Oregon.
Pamela Leavitt, the CUAO's senior vice president of governmental affairs and public relations, told The Credit Union Journal a portion of the hearing focused on short-term loan alternatives credit unions could offer to consumers.
On one hand, she explained, some CUs have had such loans in place for some time, but they have not referred to them as "payday loans." On the other hand, many credit unions have avoided such loans.
"Many credit unions in Oregon say they have offered 'payday advance loans,' 'CU through payday loans' or 'advantage loans' for years," she said. "It is important for credit unions to be able to give members $500 to get them through the next two weeks, because it shows what credit unions can do in the marketplace.
"However, there is a name dilemma," she continued. "We don't want to be payday lenders, but we want to get products out there consumers understand. The regulator wants credit unions to call them payday loans. The difference is: a short-term loan at a credit union gives a person $500 at a certain rate for a certain number of days."
Ballot Measures, Hearings Coming
According to Leavitt, the last session of the Oregon state legislature included a payday lending bill that would have placed an interest rate cap on lenders.
"The Credit Union Association of Oregon did not take a position on the bill, but many members are extremely concerned about payday lending," she said.
The bill was not approved, but the examination of the payday lending industry is far from over, Leavitt said. Although there is no legislative session until January 2007, Oregon appointed an interim committee that will hold hearings on payday lending throughout the state. The committee will prepare reports to be heard in next year's sessions.
In addition, Leavitt expects there to be three ballot measures put to the voters this November.
"All three will have to do with payday lending reform. Groups are gathering signatures right now, and I expect to have a chance to examine those in a few months."