The District of Columbia council passed the Payday Loan Consumer Protection Act of 2007 Tuesday in a vote of 12 to 1.
The bill would cap the annual percentage rate on payday loans at 24%, or about 90 cents for a $100 loan repaid within two weeks. Current market rates are about $15 for a $100 loan.
"As payday lending took root here, we've come to learn its true predatory nature," the bill's sponsor, Councilwoman Mary Cheh, said in her opening remarks.
"Less than 1% of borrowers are able to pay [the loan] back in two weeks," she said. Payday lenders "steal futures by their practices."
Mayor Adrian M. Fenty is expected to sign the bill into law. If he does the District of Columbia would join 13 other states or counties that have set a 24% cap on payday lenders.
The bill's sole opponent, Councilman Marion Barry, defended payday lending. He said 60,000 D.C. residents used the service this past year and made more than 700,000 transactions, and he argued that the legislation would force 90% of the city's payday lending outlets to close.
But Ms. Cheh said she expects alternative sources for emergency cash to emerge, as they have in other jurisdictions that have capped rates on payday loans.
