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Posts published in “Day: September 6, 2011”

Gone but not forgotten

September 6, 2011

"In five minutes, we don't exist as a commission," Chair Evan Frasure said. It felt a little surreal, as if an anti-bomb were ticking.

Another motion came up, and then the commissioners voted on C50, a Democratic-backed congressional redistricting plan. It failed on a tied 3-3 vote. (At no point, evidently, did any commissioner from either side break with their party.)

"And we are dissolved here in about three minutes," Frasure said.

Frasure, who has been probably the most dominant figure on the commission (and was a major figure in the last two reapportionments), said that if the commission is called back by the Idaho Supreme Court, he may not be back, owing to health concerns. He and others said their goodbyes.

And then at 5 p.m. mountain, they turned into a pumpkin. More than two months of effort, review of more than 100 congressional and legislative map proposals (the highest-numbered legislative proposal was 82), came to an end. The commission's deadline expired. Next, it gets sued for nonperformance, a case that goes to the Idaho Supreme Court.

The need for new congressional and legislative maps will not go away, of course, and now either the Supreme Court will draw its own maps or - more likely - call the commission back for another shot.

It has been an intensive, sometimes emotional and angry, effort. On the last day flashes of anger and accusation cropped up. (Frasure, for example, essentially accused the Democrats of "holding hostage" plans containing only minor differences between the sides.)

In the end, the differences were not enormous, but they were instructive: They seemed to center around those few areas of the state where Democrats are at least somewhat competitive.

A northern Idaho piece of the legislative plan seemed to have won support that was unanimous or nearly so, and did elegantly resolve the Moscow-Lewiston problem: Those two cities traditionally each have, intact, anchored a legislative district, but no longer have the population to do so as they once did. Lines were skillfully drawn keeping Lewiston whole and Moscow nearly so.

But arguments over the lines in Ada County proved less tractable. Democrats were pushing for proposals which would keep Ada County whole (Republicans submitted one that did so, in nine districts), but keeping as many competitive districts as at present is tougher. Democratic Blaine County was a problem area too, as Republicans and Democrats each wanted to match it up with a different collection of nearby Republican counties to form a districts. And the Pocatello area, and the southeast rural areas near it, led to lots of inconclusive back and forth.

The problem, of course, is that any single change reverberates around the rest of the map. Someone winds up getting nailed.

So, next stop: The courts.

ANOTHER THOUGHT So, in Northwest redistricting, we so far have the following results: In Oregon, the legislature produces maps with bipartisan support well ahead of deadline; the Idaho redistricting commission deadlocks on partisan lines and runs out the deadline. Washington's (commission) up next.

Payday loans in review

September 6, 2011

Along one of the main streets of our nearst commercial center, McMinnville, there's a yellow-front storefront offering payday loans. It has been quietly going about its business for some years, after a big batch of others folded tent a few years back, in the wake of a new Oregon law limiting how much such lenders could charge for their loans.

A state fact sheet from 2006 said that "In Oregon, the number of locations increased from 184 in 2001, when the "short-term personal loan license" was created, to 323 as of Dec. 31, 2004, and 360 as of Dec. 31, 2005. The dollar volume of payday loans in Oregon increased from $63.8 million in 1999 to $250 million in 2004. The number of Oregon payday loans extended annually increased from approximately 285,000 in 1999 to 747,542 in 2004. Charges or fees for these loans, when expressed as an Annual Percentage Rate (APR), can often exceed 500 percent." It said that of 1,221 borrowers examined, 59% took out five or more payday loans in the previous year - were using the service repeatedly.

That was shortly before the legislature passed the law limiting how much the payday loan businesses could charge. The law limited the annual interest rate from 528% to 156% and drew out minimum loan duration from 14 to 31 days, along with some other changes. After the limits, most of the businesses left Oregon - an indicator of how much they were charging - though some remain, and evidently thrive.

All this was before the massive economic turndown, and you might expect a call for more laxity in payday loan regulation. But there hasn't been much, save for an August 31 blog post by the Cascade Policy Institute.

"Ready, Fire, Aim for Oregon's Payday Lending Policy" make the argument that "Legislators have jumped the gun in banning traditional payday lending in Oregon. They aren’t protecting vulnerable consumers as much as denying a necessary service. Furthermore, there has not been a major push to provide consumers with a convenient, viable alternative."

This seems worthy of note, because of the economic environment, on several grounds.

First, the service isn't being denied - payday loan operations are active businesses in locations around Oregon (as elsewhere); they evidently can function under the current limitations. More could set up shop if they chose; but evidently few have chosen. That may speak too to demand for the service.

There are other peculiarities. Angela Martin, executive director of Economic
Fairness Oregon, noted one: When the lending rates at these shop dropped per the state law, the norms of supply and demand would suggest a spike in the demand to take advantage of the lower numbers. The spike never happened. Martin suggested that some of the activity in payday lending represented a "false demand" of consumers borrowing from one payday lender to pay off a loan from another, and similar activity.

In any event, even in the wake of the bum economy, "they can't point to any evidence that usage has gone up."

The Cascade post also pointed to an October 2008 Dartmouth University study on the Oregon loan rate cap, and said “The results suggest that restricting access to expensive credit harms consumers on average." The study, commissioned and paid for by the industry (a red flag), surveyed comments made by customers of payday loan operations (from lists provided by lenders), but there wasn't much look-behind - and such customers are naturally likely to rationalize their choices.

A January 2009 University of Washington critique of the study (which seemed to be longer than the Dartmouth study itself) said that "relies on a single, small-sample survey fraught with methodological flaws. Moreover, survey results do not support the claim that Oregon borrowers fared worse than Washington borrowers on any variable that can be plausibly attributed to Oregon’s 2007 payday-loan (PL) interest-rate cap legislation. In short, Zinman’s claim is baseless. In fact, Oregon respondents fared better than Washington respondents on two key variables: on-time bill payment rate and avoiding phone-line disconnects. On all other relevant variables they fared similarly to Washington respondents."

There are also out of state lenders, and Cascade does note a news report saying "there already has been a rise in complaints against out-of-state online payday lenders conducting fraudulent and illegal business practices." But does that suggest in-state operations would be better?

The ironic concern about the out of staters Cascade expressed was that "These are the real risk to consumers because the Oregon Attorney General’s office has little control over them." Actually, the state has been going after them. The state Department of Consumer and Business Services said on July 13 that it had "issued a cease-and-desist order against online lender Global Payday Loan LLC and fined the company $90,000 for violating Oregon’s payday lending laws. The unlicensed Utah company loaned seven Oregon consumers between $100 and $500 each through its website, payday-loan-yes.com. The company then charged the consumers interest rates between 353 percent and 2,737 percent." In March, it "issued a cease-and-desist order against online lender E-Payday-Loan and fined the company $10,000 for violating Oregon’s payday lending laws. The unlicensed Utah company loaned an Oregon consumer $350 through its website and then charged the consumer approximately 842.31 percent interest on that loan over a 52-day period."

Not a real ringing endorsement for deregulation, in this arena at least.