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Resolution to Maintain Strong Washington State Consumer Protection Laws Relating to Payday Loans

WHEREAS Washington ranks high in studies on consumer protections for consumers on payday loans; and

WHEREAS Washington’s payday lenders have lost three-quarters of their business in the five years since a tough new state law restricting the high-cost loans marketed to poor families took effect; and

WHEREAS   the industry, led by Seattle-based Moneytree, is lobbying state lawmakers to revamp the law. Lenders are backing legislation  - SB5899 and HB1922 -to eliminate traditional two-week payday loans and replace them with “installment loans” that would stretch repayment out for up to a year; and

WHEREAS anti-poverty and consumer-advocacy groups are panning the legislation, arguing new fees would undermine the state’s 2009 reforms and ensnare more people in a debt trap. “You can’t say with a straight face this is good for consumers,” said Bruce Neas, an attorney for Columbia Legal Services; and

WHEREAS state Attorney General Bob Ferguson came out against the proposal in a letter to legislators, saying Washington’s payday-lending system includes important safeguards for consumers “and does not need to be overhauled.” and

WHEREAS this new system will leave low-income borrowers paying more. Payday lending was illegal until 1995. It took 15 years to get good reforms. Washington has an average APR that is third-lowest in the nation and a default rate of 19 percent – Colorado is 38 percent; and

WHEREAS protections in the payday lending statute provide an off-ramp from the cycle of debt and no such protections exist in this bill; and

WHEREAS active military is prohibited from using this type of debt which begs the question as to why this product is deemed unsafe for the military but perfectly safe for other citizens; and

WHEREAS a recent study from the Harvard Business School finds short-term credit increases the rate by which people overdraw their accounts; and

WHEREAS this is an unproven expensive loan product proposed to be put on the market with little study. Installment lending would result in worse outcomes for low-income people; and

WHEREAS the Washington State Democratic Central Committee is dismayed that Senators Marco Liias (Prime sponsor), Karen Keiser, and Steve Hobbs and Representatives Larry Springer (prime sponsor), Chris Hurst, Sam Hunt, Steve Kirby, Tana Senn, Eric Pettigrew, Judy Clibborn, Dean Takko, Derek Stanford, Sharon Wylie, Jim Moeller, Sharon Tomiko Santos, Mia Gregerson all sponsored this bill that rolls back consumer protections from the predatory payday lending industry in favor of a bill whose sole supporter in testimony was the owner of Moneytree.

THEREFORE BE IT RESOLVED by the Washington State Progressive Caucus  that we oppose SB5899 and HB1922 which serve to weaken Washington State’s hard-won consumer protection laws relating to payday loans; and

THEREFORE BE IT FURTHER RESOLVED that the Washington State Progressive Caucus  send copies of this resolution, upon adoption, to the Washington State Democratic Central Committee for its consideration at its next meeting.

Passed by the Washington State Progressive Caucus at its 4/18/15 meeting in Pasco, Wa.