With only a few days left in the special legislative session, a controversial proposal backed by Seattle-based payday lender Moneytree advanced another step. It was one of five policy bills moved by the Senate Rules Committee along with the Senate budget.
Critics of Senate Bill 5312 are crying foul, saying the proposal is an end-around previous payday-lending legislation that reduced predatory lending practices and that it shouldn’t be part of budget negotiations.
The bill would allow payday lenders to make a new type of loan of up to $1,500 with effective interest rates that could top 200 percent. The installment loans would have repayment periods from six months to 18 months.
Currently, payday lenders can lend up to $700, and those loans have to be repaid on the borrower’s next payday.
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Sen. Sharon Nelson, D-Maury Island, has been one of the most vocal opponents of the bill since it was introduced in January. She said she disagrees with the claim that it is a necessary jobs bill.
“That’s just not the case,” Nelson said.
Nelson said the “harmful effects of predatory lending” would offset any jobs that would result from the legislation.
“Right now, all we should be dealing with is the budget of the state of Washington,” she said.
Jim Richards with Statewide Poverty Action Network echoed Nelson’s concerns.
“Apparently allowing one company to increase its predatory lending that preys on the working class and on the poor is more important than passing a state budget,” Richards said.
Sen. Steve Hobbs, D-Lake Stevens, the prime sponsor of Senate Bill 5312, said it was “an attempt to get rid of payday lending and replace it with something better.”
“It would be something of a compromise between payday lending and traditional bank loans.”
“I’ve never liked the payday industry,” Hobbs added.
He said he has two amendments he would like to see added to the bill.
He said one would prohibit military personnel from taking out the loans — something the Department of Defense has insisted on since the bill was first introduced. Hobbs said his other amendment would reduce some of the fees associated with the proposed loans.
He also said he didn’t think he would be able to vote for the bill if at least one of the amendments weren’t adopted — a decision that he acknowledged might sound surprising given he’s the prime sponsor.
Republicans control the Senate with the help of two Democrats, known as the Majority Coalition Caucus.
Hobbs said he’s not sure why the Majority Coalition Caucus is pushing the bill so hard. He said he’d prefer to see his bills related to renewable energy or aircraft excise taxes taken up instead.
“But it’s not my decision,” Hobbs said.
The other policy bills moved out of the Senate Rules Committee
were: a bill relating to workers-compensation settlements; one
that would cap non-education spending, a proposal regarding toxic-cleanup projects; and a bill that would give school principals veto power over which teachers are assigned to their schools.