Ore. interest rate cap challenged |
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Thu, 28 Jun 2007 21:16
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SALEM, Ore. (AP) - A car title lender has challenged a new Oregon law capping annual interest rates on consumer loans at 36 percent.Northwestern Title Loans of Georgia, which operates 17 stores in Oregon, will ask a Marion County Circuit judge Friday to temporarily prevent the law from going into effect July 1. The company hopes a court eventually will throw out the law.The suit names the state and the Department of Consumer and Business Services. Cory Streisinger, department director, said it would fight the lawsuit.Supporters of the law argue that car title and payday lenders trap vulnerable low-income residents in cycles of debt by charging triple-digit interest rates.Car title lenders make small loans using car titles as collateral and commonly charge more than 300 percent annual interest.The law limits interest rates to 30 percentage points above the Federal Reserve discount rate, now at 6.25 percent, on consumer loans less than $50,000.Northwestern argues that the law violates the Oregon Constitution's 'guarantee of equal protection' because the interest rate cap applies only to consumer lenders and not to state banks and credit unions.'If the evil that HB 2871 seeks to combat is high interest rates on small consumer loans, there is no rational basis for permitting some lenders to make such loans, but not others,' the suit says.State lawyers advised legislators that the state has authority to treat consumer lenders differently from banks and credit unions.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Danish Central Bank raises discount, folio rates to 4.00 pct from 3.75 