The Payday Loan Consumer Protection Act, which holds once-exempt short-term lenders to the District’s 24 percent annual interest-rate cap, has passed the D.C. Council by a 12-1 vote.
The lone opponent was Ward 8 Councilmember Marion S. Barry Jr., who originally cosponsored the bill with Ward 3’s Mary Cheh. In an interview earlier this month, Barry said he didn’t understand the true nature of the bill—-which lenders say will kill the payday industry—-when he put his name on it.
The bill’s passage follows a pricey effort by the payday loan industry to stall its progress with a PR campaign, lobbying, and donations to community groups.
In remarks before his no vote, Barry cited the widespread appeal of payday loans, noting that there have already been more 60,000 payday transactions in the city this year, and lamented the fact that loan seekers would be forced to go to Virginia. (Maryland already has an interest-rate cap.)
“Let me say, there are some unscrupulous people in this business who have taken advantage of people,” Barry said from the dais. “Just because there’s four or five rotten eggs, you don’t throw out all the eggs.”
Barry mentioned reforms such as limiting loan “rollovers” and mandating financial counseling, but he did not introduce any amendments to the bill or substitute legislation.
Said Barry: “I want my conscience clear that I’ve done all I can do to reform this system.”