BILL REQ. #:  H-4910.2 

READ FIRST TIME 2/3/06.   

     AN ACT Relating to studying small loans; creating a new section; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   (1) The legislature finds that there is inadequate information to determine the fairness or reasonableness of fees and interest associated with small loans, also known as payday loans, regulated under chapter 31.45 RCW.
     (2) The director of the department of financial institutions shall study the economics, business models, and practices associated with the small loan business operations of lenders with small loan endorsements under chapter 31.45 RCW. The director must determine break-even points for small loan businesses included in the study, grouped by size of operation and/or volume of business, where the revenue from small loan operations equals the expenses associated with small loan operations. When making these determinations the director may make reasonable assumptions as to the expenses to be considered, including but not limited to the impact of licensing fees, bonds, and assessments under chapter 31.45 RCW, other fees and taxes, employee medical insurance expenses, rent, and other business location costs, and advertising costs.
     (3) The director is authorized to request from licensees information required to complete the study and report to the legislature. Licensees are required to provide the information requested. A licensee's unreasonable failure to provide the information requested by the director shall be grounds for an enforcement action against the licensee under RCW 31.45.110(1)(j) and the imposition of the sanctions set forth in RCW 31.45.110(2).
     (4) The director must report the findings of this study to the legislature no later than November 30, 2006. The director may also study other issues related to small loans and include those issues in the report. The director may include recommendations based upon the findings in the report.

NEW SECTION.  Sec. 2   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.