State's Usury Law Doesn't Apply ToCUs
OLYMPIA, Wash. - (06/24/05) -- State chartered credit unionswanting to make payday loans do not have to be licensed under thestate's Check Cashers and Sellers Act but may only make paydayloans to members, not non-members, the Department of FinancialInstitutions said in a new legal interpretation. And because of thestates most favored lender doctrine, Washington's 12% interest rateceiling does not apply because national banks in Oregon, Idaho and21 other jurisdictions have no ceiling on interest rates and havethe ability to export interest rates to Washington consumers, theDFI said. Because of the most favored lender doctrine, creditunions and other lenders can charge interest rates as high as themarket will bear. The legal interpretation comes as at least a halfdozen state chartered credit unions have begun offering paydayloans and several others are considering doing so.