Troutdale and Proposed Payday Loan Law: Let's Slow Down

The payday loan folks are suing the City of Portland over its new payday loan regulations. According to the Portland Oregonian,

Payday loan companies file suit over ordinance:

The suit argues that Portland's law conflicts with a state law passed in 2001 to regulate the short-term lenders, who commonly charge interest rates exceeding 500 percent annually on small loans.

"The state has pre-empted local legislation" by adopting its own law earlier, said John Junkin, a Portland attorney representing the payday lenders.

Technorati tags: payday loans, Troutdale, lawsuit, Portland

So there you have it. Just as predicted by Troutdale City Attorney Marnie Allen - a lawsuit challenging Portland's new payday loan ordinance. Not coincidentally, the City of Troutdale's proposed payday loan ordinance is nearly word-for-word identical to Portland's ordinance. Gresham's new payday loan ordinance is also nearly identical to Portland's.

Why is this a big deal? Because as City Attorney Allen also pointed out, the city's insurance coverage does not include defense of probable legal challenges to Troutdale's proposed payday loan ordinance. If Troutdale passes its payday loan ordinance and is also sued by the payday loan companies, our general fund will be writing the checks to pay legal bills. Ouch.

Troutdale only has ONE payday loan store! ONLY ONE!

This makes no sense to me. The state legislature will likely have a special session this summer. They will probably address the payday loan issue with some type of new legislation. In addition, Rob Brading and his fellow Deaniacs will probably get enough signatures to put a payday loan initiative on the November ballot.

I am going to urge my fellow Troutdale City Councilors to take a deep breath. Let's slow down on local payday loan legislation.

At the very least, let's wait and see what happens with Portland's lawsuit. If the court throws out Portland's payday loan laws, it would also effectively invalidate Troutdale's nearly identical ordinance.

If the probable special state legislative session addresses the payday loan issue, it would make our proposed ordinance moot. Ditto if a state payday loan restriction initiative passes in November.

If the Troutdale City Council insists on passing our local version of payday loan regulations, I'm afraid we will end up paying some avoidable legal fees on a worst case basis. On a best case basis, we will have wasted our time and our staff's time on a problem that will be solved at the state level in just a few months.

We don't have the Troutdale tax money or the city staff time to waste.