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Jessica Barakat says a stricter interest rate cap would kill her store. (Darrow Montgomery)

Jessica Barakat doesn’t think of herself as a predatory lender. For nearly half a century, the law agreed, allowing her family to operate Crown Pawnbrokers at 14th and S Streets NW. The store survived the 1968 riots as well as the turbulent years that followed. And it has plugged along very nicely over the past decade, too, as gentrification has filled the area with home-furnishing stores catering to increasingly wealthy residents. “We fit right into the neighborhood,” Barakat says.

The upscale surroundings suggest that the mere presence of a pawnshop is not a guarantor of urban blight. Instead, the existential threat currently facing Barakat originates a few miles north, on a stretch of upper Georgia Avenue where the attitude is a little bit different.

Early this year, national chain Famous Pawn began work on a third D.C. outpost in a former real estate agent’s office opposite Walter Reed Army Medical Center. To Sara Green, the local ANC commissioner, the new pawnshop seemed to mock the street banners proclaiming her neighborhood’s rebirth: “Good Things Are Happening on Georgia Avenue.”

“In the ’80s, it was Sodom and Gomorrah,” Green says of the stretch’s previous mercantile mix. “It was either a sexually oriented business or a liquor business, primarily. And we worked very, very hard to get that part of Georgia Avenue to encourage quality retail. Having a pawnshop sends a chilling message for the future on that block.”

Three residents filed a lawsuit to stop Famous Pawn from getting a license, arguing that the Department of Consumer and Regulatory Affairs was supposed to have considered the community’s input. They also pushed Ward 4 Councilmember Muriel Bowser to introduce an emergency bill—the Predatory Pawnbroker Regulation and Community Notification Temporary Act of 2010—making new pawnbroking licenses subject to the approval of the affected ANC. It passed the D.C. Council unanimously on May 4.

But Bowser, noticing that existing laws hadn’t been updated in 20 years, wanted to go further. The council had capped interest rates charged by payday lenders at 24 percent in 2007, which totally put an end to such businesses in the District. Bowser wondered why the eight pawnshops in D.C. were still allowed to charge more than twice that amount.

Originally, Bowser proposed to immediately cut the interest that pawnshops are allowed to charge from 60 percent per year (that’s five percent per month) to 24 percent per year (or 2 percent per month). That would make D.C.’s among the nation’s toughest. Massachusetts may come the closest, with a 36 percent cap.

Barakat threw herself on the mercy of the councilmember’s staff. “I’ve never been to the Wilson Building before, and I was crying my eyes out, saying, ‘You know what this is gonna do to me?’” Barakat recalls. The last-minute appeal spared Crown, at least for the time being: Bowser modified the temporary legislation to affect only those shops granted licenses after April 1, 2010. But now she’s pushing a permanent version that would cover all of them.

At a hearing on the bill early this month, Bowser said she wasn’t trying to chase an entire industry out of town. “I would like to clarify that this bill does not ban pawnshops,” she said. “What this bill says is that consumers should be protected.”

The proposed limit rests on two assumptions.

The first: Pawnshops are a detriment to development, polluting neighborhoods with crime and poverty. But Crown isn’t the only local pawnshop that stands as an exception to that rule. One of Famous Pawn’s locations is right next to the tony Social Safeway in Georgetown. (“Most people don’t even notice it’s there,” says local ANC Commissioner Charles Eason.) Meanwhile, there are no pawnshops in all of downtrodden Wards 7 and 8.

The second: Pawnshops take advantage of society’s most helpless. “Decisions made under desperation, without contemplation, often lead to disaster,” said ANC 4A Commissioner Dwayne Toliver, who lives near Georgia and Fern Street NW. “Just because you give someone a choice doesn’t make the consequences conscionable.”

At the hearing, Famous Pawn was represented by Rick Wessel, CEO of its corporate parent, the Texas-based moneylender First Cash. The publicly traded company owns 560 stores in the United States and Mexico, and has been doing great during the recession: Profits rose 14 percent in fiscal year 2009. Wessel spread a bit of that money around in the days between Bowser’s hearing and the June 10 campaign filing deadline, making at least $8,000 in donations to Councilmembers David Catania, Jim Graham, Harry Thomas, Kwame Brown, and Vince Gray.

First Cash’s local lawyer, Roderic Woodson, from the blue-chip firm of Holland and Knight, told Housing Complex that the company would shut down all of its pawnshops in the District if Bowser’s bill passes.

The D.C. pawn industry’s greatest weapon, however, could be the 28-year-old Barakat, who at her testimony this month looked like the picture of the noble businesswoman fighting big-government overreach. Backed by her mother, who was too emotional to speak, Barakat proudly traced the history of her 14th Street shop—taking particular offense to the bill title, which labels pawnbrokers “predatory.”

Then she brought out some of her repeat customers. “It has been a great financial asset for me,” said social worker Anne Thomas, who credited the short-term loans with helping pay for her son and daughter’s higher education. Joy Davis, a criminal investigator, said she recently pawned something with Crown to pay for her mother’s funeral.

The compelling display was at least partly orchestrated by attorney Douglas Patton, a former deputy mayor for economic development now with the government-relations firm Oldaker, Belair, and Wittie. Patton’s client list includes the Archdiocese of Washington and General Motors; he also co-chairs mayoral hopeful Gray’s fundraising committee. He says he took Barakat’s case out of a desire to help out small business.

Indeed, it’s hard to lump Barakat with the pawn industry’s corporate royalty. Her average loan amount, $150, is less than half of the average between Famous Pawn’s two existing D.C. stores. But the basic economics are similar: She charges $2 a month on anything valued at less than $40, 5 percent a month on items up to $500, and 2 percent on anything over $1,000. The reason pawnshops should be able to charge higher rates than a payday lender or a check casher, the industry argues, is that dealing with physical collateral makes for higher overhead.

Barakat, though, hasn’t joined up with her local pawnbroking brethren, perhaps realizing that she doesn’t benefit from the association with shops that recall the old pawnbroker stereotype—such as the Famous Pawn on lower Georgia Avenue, with its Plexiglas barriers and dodgy setting. She says she’s even tried to talk Wessel out of his plan to put a store on upper Georgia, where all the trouble started.

“If the neighborhood doesn’t really want you there, maybe you shouldn’t go in there,” she says.