PORTLAND, Ore. — After more than two years of plugging payday loan alternatives, Oregon credit unions found themselves in the limelight recently as the state's Democratic governor set up new vehicles to guide consumers to CUs for the products.
Making use of a Web site, a public service ad campaign and an 800-hotline, Gov. Ted Kulongoski suggested Oregon borrowers should make wider use of alternative products available at CUs rather than absorb 500% interest rates at the payday shops.
"We've made real progress protecting hard-working Oregonians from high cost payday loans," said the governor at a news briefing held in the offices of Unitus CU of Portland.
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He told reporters the Web site connecting consumers and CUs plus the 800-line "will help get this important message out that there are better alternatives for consumers" than the usurious payday loans.
The 800-number and the Web site are being maintained by SafeNet, a Portland firm which currently provides Oregon consumers various health and human services.
Helping to set up the SafeNet link and joining in the Kulongoski press meeting were officials from the Department of Consumer and Business Services and the Credit Union Association of Oregon, which two years ago helped guide CUs in developing payday products.
The league activity followed jawboning by the state's former top regulator that CUs might be denied branch approvals if payday alternatives were not available. Some CUs had begun offering alternatives beforehand while many others, both federal and state, begin promoting them as well in the last two years.
Last April, Kulongoski signed legislation establishing reasonable limits on payday lending charges aimed at protecting consumers, but that law does not take effect until July 2007.
Gene Poitras, president and CEO of CUAO, said the state's program of encouraging payday alternatives among CUs has been "fairly successful and I have heard of no problems or big losses."
Unitus CU said its default rate has been at 6% on its alternative loans compared to 3% on conventional consumer credit.
Unitus has been offering what it calls its "Advance" loan at 18.5% and in nearly a year has extended 1,400 loans. The Portland CU said it has not done much advertising to nonmembers, but has worked with local charities on loan promotion.
At the Kulongoski briefing, Pat Smith, president/CEO of Unitus and co-chair of CUAO's Government Affairs Committee, told reporters, "I know I speak on behalf of all credit unions in this great state when I say that serving the financial needs of our community neighbors is our primary objective. As not-for-profit financial institutions, we take that charge seriously."
A CUAO spokeswoman said since the debut of the SafeNet link connecting CUs, there have been some 80 calls inquiring about alternative products. A public service education campaign joined by the state will start next week on radio and TV and run through September.
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