The new payday lending scheme that passed off the Senate floor today will ensure that middle class families and military personnel can once again be trapped in a spiral of debt.
In 2009, we passed payday lending reform. It put safeguards on a predatory lending product, allowing borrowers to make reasonable payments and not end up buried in high-interest loans.
But the payday industry is back, marketing this new consumer installment loan as having a ‘36 percent interest rate.’ In reality these loans include massive fees and penalties that take the rate as high as 220 percent. As a former banker, I’m confident that if a money lender can’t make a profit at 45 percent interest, as allowed in existing law, they have a failed business model.
As a legislator, I am shocked that a majority of my colleagues in the Senate voted to sidestep effective protections for Washington families and instead put high-interest lenders back in charge of people’s lives.