Merkley: Feds Must Clamp Down on Payday Loans

New Report: Housing Crisis Forcing Families into the Hands of Predatory Lenders

As the American housing crisis worsens, more and more families are being forced to turn to payday lenders for short-term loans with sky-high interest rates just to make ends meet. House Speaker Jeff Merkley, candidate for U.S. Senate who led a crack down on payday lenders in Oregon is calling on the feds to act. According to a report yesterday, nonprofit credit and mortgage counselors suggest that the number of people using these so-called "payday loans" is growing as the U.S housing crisis worsens (Reuters, 3/24/08).

Merkley championed the cause against scurrilous predatory lenders in Oregon by passing the Predatory Lending Cap Act, which imposed a 36 percent interest rate cap on state-regulated consumer loans, and the Check Cashing Fairness Act, which placed strict limits on check cashing fees.[1]

"The Bush economy is squeezing more and more families to the brink forcing them into the hands of loan sharks," said House Speaker Jeff Merkley. "Payday lenders are profiting off of innocent families who need help. We must change the system in Washington D.C. to protect families from predatory loan scams and get our economy growing again. In Oregon we took on the powerful predatory lender lobby and won. We need leaders in Washington D.C. to stand up to these big special interests and do what's right for families."

A typical pay day loan is just a few hundred dollars, with a term of only two weeks. But the interest rate on these loans can be as high as 1,000 percent. The average borrower ends up paying back $793 for a $325 loan, according to the Center for Responsible Lending.

Pay day lenders issued more than $28 billion in loans in 2005, according to the latest available figures.

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[1] Office of the Speaker, Press Release, "Four Days Until Sine Die," 6/25/07.

Posted March 25, 2008
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