Bill to slash payday-loan rates sinks

OLYMPIA — A bill that would slash the interest rates charged by payday lenders appears dead after a key committee chairman said the proposal won't get a hearing.

"I want to do this in baby steps," said Rep. Steve Kirby, who leads the House Insurance, Financial Services and Consumer Protection Committee. "I have to be a little more thoughtful on these issues than someone who is not on the committee and just puts a bill out there."

As chairman, Kirby, D-Tacoma, decides which bills get a hearing — and a chance to pass. He said Rep. Sherry Appleton's push to cap annual interest rates at 36 percent for payday lenders won't get to the hearing stage.

Her proposal would give borrowers more time to pay back loans and curb interest rates, which can reach the equivalent of 391 percent annually. Payday lenders say the bill would drive them out of business.

The lenders offer short-term, high-interest loans in amounts up to $700. A borrower writes a postdated check for the loan amount, plus the interest charge. The lender either cashes the check or collects cash from the customer when the loan is due.

After pronouncing Appleton's approach dead, Kirby introduced his own payday-lending bill, House Bill 1817, this week. It's sponsored by all members of his committee and is scheduled for a hearing Feb. 13.

"Rather than the nuclear option, which is just to ban them [payday loans] in this state, we are trying to do things that interrupt the cycle of revolving debt," he said.

The bill, while leaving fee structures and business practices largely intact, would allow customers to pay back some loans in at least four payments over 60 days at no additional cost.

A borrower could use the payment-plan option only once a year, but it would be available after just one loan. Currently, borrowers can opt into a similar payment plan after four successive loans and are usually charged an extra fee.

Appleton, D-Poulsbo, said Kirby's legislation "doesn't change the status quo at all" because most people taking out payday loans borrow so often that one free payment plan would make little difference.

Money Tree CEO Dennis Bassford is more supportive.

"It is certainly a better attempt at good regulation than what it is being proposed by Rep. Appleton," said Bassford, who leads one of the state's largest payday-lending chains.

He and Money Tree Vice President David Bassford donated $1,200 to Kirby's last political campaign.

Elliott Wilson: 360-236-8169 or ewilson@seattletimes.com