Cory Streisinger, director of the state Department of Consumer and Business Services, says payday lenders are "redefining" their services to escape the interest-rate cap and fair lending practices imposed by the new payday-loan reforms.

Streisinger last week told the Senate Interim Committee on Consumer Protection that a number of payday lenders are interested in switching their lending licenses.

Here's how that would allow them to dodge the reforms taking effect in July 2007.

Oregon law allows two categories of lending licenses. Payday loans require a short-term lending license, which will have a 36 percent annual interest-rate cap—instead of no cap—under the just-passed reforms. A regular consumer-financing license has no interest-rate max.

Unlike short-term payday loans, consumer-finance loans are required to have a term of at least 61 days. Traditionally, borrowers repay part of the principal each month along with interest payments that tend to be below the 17-percent annual cap for federally licensed lenders. But payday lenders are charging up to 372 percent interest for the longer-term loans.

Angela Martin, director of the economic-fairness campaign at the progressive group Our Oregon, says 17 lenders have applied for the regular license since the Legislature passed the payday-loan reforms.

Streisinger told the Senate committee that her department has seen "troubling instances" of these loans being structured so borrowers make a big interest payment each month but still have the entire principal to repay at the end of the loan term. She wants a 36 percent annual interest-rate cap on all small consumer loans.

One of the payday lenders applying for a license change says he's just trying to stay afloat.

"I have to switch to longer-term loans or I'll go out of business," says Kenneth Chapman, owner of Main Street Loan Company in Astoria.

No tears shed here.