Let’s prevent return to predatory lending

April 16th, 2013|

This op-ed co-authored by Rep. Cindy Ryu and Sen. Sharon Nelson appeared in the Everett Herald on Tuesday, April 16:

Today lobbyists in Olympia are working to throw our families back into a spiral of debt under the guise of a new installment loan product. This product isn’t needed because payday borrowers already have the right to a better, cheaper installment loan option.

Legislation recently passed by the Republican-controlled Senate and by the House Committee on Business and Financial Services opens the door for drastic growth of the payday lending industry by creating a product that some have nicknamed "payday lending on steroids."

Senate Bill 5312 was described to legislators as creating new, small installment loans with a maximum 36 percent interest.

At first glance that appeared to be reasonable and perhaps better than current payday loans. However, the real cost to our hardworking families skyrockets to 194 percent when you include the loan origination and monthly "maintenance" fees which are buried in the bill.

When the true cost of this product became clear, the military requested that their members be excluded from being able to use this new high interest rate product. That exemption is in the legislation but this product will trap other hard working families into a cycle of ongoing high rate debt. If this product is not good enough for the military, it is not good enough for anyone else.

To no one’s surprise, this legislation is strongly backed by MoneyTree, one of the largest payday lenders in the country. In committee hearings, MoneyTree has been the only interest to testify in favor of the legislation as they promote this new product to the legislature. Consumer advocates and numerous other entities stand opposed.

So why is MoneyTree pushing this product?

We passed a comprehensive Payday Lending Reform Act four years ago. Prior to that legislation, working families took out these short-term, ultra-high-interest loans to pay for immediate expenses like rent, only to find themselves trapped in never ending debt.

The reforms passed in 2009 required that payday lenders give borrowers who are having difficulty repaying their loans three to six months of installment payments, interest free. With a chance to pay off their debt, Washingtonians did just that.

The $1.3 billion payday industry in our state shrank by 75 percent. Families escaped from payday loans and were able to financially build themselves back up. MoneyTree still has numerous outlets but the profits from payday lending have shrunk.

Let’s be clear: payday lenders are allowed to charge 45 percent interest under the current payday lending installment loan plan. If MoneyTree and other lenders can’t make a profit at such an incredibly high rate, they have a broken business model.

There is no justification for creating a new type of loan that will earn MoneyTree and other lenders 194 percent interest at the expense of our hardworking families. Passage of SB 5312 will do just that.

Supporters argue that high-interest loans are a lifeboat as the only form of credit available to some people, and with this legislation we are offering them and their communities an important new product. Frankly, we find that logic offensive.

Instead of a new product, MoneyTree needs to be up front with their customers. An installment loan plan under the existing Payday Lending Reform Act is available today – it just isn’t as profitable as the new product they are promoting.

Now is the time to step up and once again firmly slam the door shut on predatory loans.

Sen. Sharon Nelson, D-Maury Island, is a former bank executive, is currently the assistant ranking member on the Senate Ways & Means Committee and serves on the Senate Financial Institutions, Housing and Insurance Committee. Rep. Cindy Ryu, D-Shoreline, is a former insurance agent, and serves as the Vice Chair of the House Business & Financial Services Committee.

Payday loan bill hurts the vulnerable, helps the lenders

March 21st, 2013|

The Olympian’s editorial board has added its voice to the chorus of opposition against payday lending legislation that recently passed in the Senate:

A bipartisan group of state senators is trying to undo the restrictions placed on high interest-rate payday lending four years ago. If passed, Senate Bill 5312 would once again permit payday lenders to prey on our state’s poorest and most vulnerable citizens.

The bill should have died in committee, because it is so contrary to Washington state values. Instead, it cleared the Senate on a vote of 30 to 18. All the South Sound senators voted in favor, including Sens. Randi Becker, Karen Fraser, and Tim Sheldon.

Payday lenders profit on the misfortune of those who cannot pay their everyday expenses by offering advances on future paychecks at excessive rates of interest. Payday loans help fuel the downward spiral often associated with substance and gambling addictions.

The industry was getting out of hand in 2009, causing the Legislature to pass reforms that protected people from getting trapped in a cycle of inescapable debt.

Those reforms successfully reduced payday loan debt statewide by 75 percent.

But Senate Bill 5312, introduced by Democrat Sen. Steve Hobbs, would undermine the 2009 Payday Lending Reform Act by reclassifying payday lending as installment loans, and permitting loan costs of up to 220 percent. It would strip away the protective restrictions for military families under federal law, and make them eligible for these unreasonable high-interest loans.

The Seattle-based moneylender, Moneytree, is pressing legislators to allow this end-run around the 2009 restrictions because online money lending is cutting into its business, and an assertion that consumers want a longer period of time to pay back short-term loans.

But that’s no reason to expose our state’s most vulnerable to what the Statewide Poverty Action Network called “payday lending on steroids.”

It is a reason to attack predatory lending on a national scale, including the rampant online operators. Oregon Sen. Jeff Merkley has done just that. The Stopping Abuse and Fraud in Electronic Lending Act would shut down the most egregious schemes of the online payday industry.

Our state senators and Moneytree should support that effort, rather than reopening the floodgates in our state.

One of the bill’s strongest critics, Sen. Sharon Nelson, says, "As a former banker, I view this legislation as a return to the dark days of predatory payday lending, and a money machine for those who profit on other’s indebtedness."

According to the Pew Charitable Trusts, online loans will total 60 percent of the total payday loan market by 2016, almost doubling its share in 2011. Americans borrowed $13 billion on payday loans in 2011, up 120 percent from 2006.

We’re surprised that Democratic senators sponsored this bill. Perhaps they were under the false impression created by SB 5312’s supporters that it would generate new state revenue from licenses and fees. The state budget office, however, has said it would cost the state more to implement than the revenue it would generate.

Perhaps senators saw this as a consumer advocacy bill by creating more choice for individuals. But enabling bad financial choices will cost us all in the end.

We understand that Moneytree wants to protect its business, but the Legislature should not enable one industry to succeed on the backs of low-income people trying to survive on a financial edge.

Legislators interested in protecting consumers and the most financially vulnerable will let SB 5312 die in the House and stand firm in their continued support for the 2009 Payday Lending Reform Act.

Sen. Nelson’s statement on the March revenue forecast

March 20th, 2013|

Today Sen. Sharon Nelson, D-Maury Island, a member of the Senate Ways & Means Committee, issued the following statement after the release of the March revenue forecast, which showed a net gain of $40 million in revenue over the next two years and that the forecast is mostly unchanged from November projections:

“Washington state is finally emerging from the Great Recession and this forecast shows we are making progress.

“The numbers released today show that we are finally on a path to economic recovery. We have an obligation to our children and families’ futures through funding education, creating jobs and protecting our quality of life.

“While the numbers released today are better than expected, we still have much to accomplish.”

Senate honors Seattle Raging Grannies

March 13th, 2013|


Today the Washington State Senate honored the Seattle Raging Grannies, a group of wise women who use song, dance and humor to promote global peace, social and economic equality.

"I am very proud to welcome and honor this group of extraordinary women," said Sen. Sharon Nelson, D-Seattle, who sponsored Senate Resolution 8629 in recognition of the group’s contributions. "These women understand the importance of protecting the vulnerable, working to improve their conditions and conserving the environment for future generations."

The group works to raise awareness and challenges its audiences to help bring about social change to end economic oppression, especially for women and children, and to end racial inequality, environmental destruction, human rights violations and arms proliferation.

"Their blend of old songs with new lyrics that mirror the policies, personalities and current issues is one-of-a-kind and brings a fresh perspective on so many of the challenges we face as a state, nation and world," said Nelson.

The Seattle Raging Grannies model themselves after the Canadian Raging Grannies and began in Olympia in 1996. This year their activism has focused on preventing climate change. In a special performance after their resolution, they performed their new song, "Radical Environmentalists."

Nelson grades Republicans on education

March 7th, 2013|

Yesterday the Washington State Senate voted to approve Republican education bills that fail to address the requirement set forth by the Supreme Court to fund education and our schools. Sen. Sharon Nelson, D-Maury Island, issued the following statement:

“According to legislation passed yesterday, if Republicans in the Senate were a school they would have earned an “F” for failing to do their paramount duty and fund education. They brought before us a list of more unfunded mandates without any reference to how we will pay for them as a state.”

“I am proud of my Democratic colleagues, especially those on the Early Learning & K-12 Education Committee, who reiterated what Republicans call reforms are really just hollow promises, and who were relentless in advocating for our children who will potentially be affected by this legislation.

“Republicans clearly showed that they are more concerned about labeling our schools and offering unfunded mandates than creating real results.

“We cannot keep raising expectations of our schools and our students when there is no clear plan in place to give them the critical resources and funding they require.”

Refusal to take vote kills critical bill to protect environment, kids

February 22nd, 2013|

Sen. Sharon Nelson, D- Maury Island, issued the following statement after Senate Republicans in the Energy, Environment and Telecommunications committee refused to take a vote on SB 5181 which would require the removal of toxic chemicals from common household items.

“I was hopeful that we would be able to come together to protect the environment, our children and our loved ones from incredibly toxic flame retardants which are known to cause cancer and other medical problems.

“This bill had bipartisan support and at least deserved to have a vote and a chance in our committee. As a grandma-to-be I am very concerned for our children, who are most vulnerable to toxic chemicals as they are growing and developing.

“Just last week after hearing testimony on this bill we heard encouraging remarks from the chair of the committee when he stated that, ‘we’ll be working very hard to move this bill forward during this legislative session and try to work it out of committee this next week.’ Apparently that was not the case.

“Senate Republicans failed their constituents and the people of Washington by denying this bill a vote.”