DC Tackles Predatory Pay Day Practices
On DMI Blog, Mark Winston Griffith looks at DC's move to protect consumers against predatory payday lending:
The Washington DC council boldly stood up to the payday lending lobby yesterday and essentially made usuriously priced short term loans illegal in the Chocolate City. With a vote of 12 to 1 the Council mandated that payday lenders be subject to the same lending rate caps as credit unions and banks. The sole dissenting vote came from disgraced ex-DC mayor, Marion Barry, who, believe it or not, actually co-sponsored the legislation in the first place. Talk about being on the wrong side of history.
According to a news brief released by the Center for Responsible Lending:
An exemption granted to DC payday lenders in 1998 allowed them to ignore the 24 percent usury cap. Since that time the industry has burgeoned in the District to the point that borrowers have been paying about $3 million per year in fees, as payday lenders trap them in loans with 350 to 550 percent interest rates.
Before the final vote, DC council members made clear their contempt for an industry that preys on working people who are just getting by.
"It's like an alien species let loose in our midst," said Councilmember Mary Cheh after yesterday's final reading in the Council chambers. "They deprive people of the opportunity to get a toehold, to get ahead. They steal money, they steal futures with their practices."
Although payday loans are illegal in New York, they ravage many other states throughout the country. The action taken by the DC Council will hopefully embolden other states to similarly protect low-income communities.