At a hearing before the Public Services and Consumer Affairs Committee yesterday, the D.C. Council heard testimony both for and against the so-called payday loan industry, which has often been criticized for predatory lending practices. The businesses market themselves as a way for lower income individuals who don’t qualify for credit or a bank loan to get emergency cash. The industry’s opponents charge that payday loans prey on our society’s most vulnerable people by charging obscene rates of interest, often topping 400 percent per year.

This is an issue that has popped up in state legislatures all over the country, as more and more stories of endless cycles of debt as a result of these payday advance loans surface. Oregon successfully recently passed legislation that caps interest rates on consumer loans like car titles and payday loans at 36 percent. Ohio looks set to soon consider a similar bill. In Arizona, legislators were debating placing restrictions on payday lenders but now appear to be deadlocked. The industry has responded to the recent spate of legislation with a pointed PR campaign, arguing that they serve a part of the population that tends to be ignored by traditional banks.

A committee vote is expected next week on D.C. attorney general Linda Singer’s proposal, introduced in the Council by chairperson Mary Cheh (D-Ward 3), to limit the annual rate charged at payday loan services to 24 percent. The other members of the committee include Jim Graham, Marion Barry, Kwame Brown and Tommy Wells, and you can contact them to let them know what you think through the D.C. Council web site.

UPDATE: Also see the Examiner’s earlier story on this bill.