More news about Ohio Payday Loans. Governor supports 36% cap
Date: Sat, 04/26/2008 - 11:32
Although the twin developments are incompatible, they both represent blows to the burgeoning payday-loan industry in Ohio.
Payday-lending supporters now feel like they're being pummeled from all sides. As the governor backs an interest rate that the industry says would quickly put Ohio's 1,600 stores out of business, House Republicans are crafting a bill that a payday lobbyist says could kill the lenders slowly.
Strickland called the annual interest-rate cap of 36 percent a "critical feature of any set of proposals aimed at breaking the cycle of debt."
"As I travel throughout the state and meet with Ohioans, I am struck by the significant problems that have resulted because of the unfortunate practices of some payday lenders in Ohio," Strickland wrote in a letter to the Ohio Coalition for Responsible Lending.
Meanwhile, Rep. Christopher R. Widener, chairman of the House Financial Institutions Committee, also issued a warning to payday lenders.
"I told the industry that their product is going to change drastically if they want to keep doing business in Ohio," said the Springfield Republican, who took the lead in writing a revamped bill unveiled this week.
Three payday-lending bills have been debated in Widener's committee for months. He took some parts of those bills and added new wording that doesn't change the current annual interest rate of 391 percent ($15 per $100 borrowed on a two-week loan), but lets customers extend any two-week loan by at least 60 days.
The bill would limit borrowers to holding no more than two payday loans at once, does not allow borrowers to have more than $500 total in such loans, and requires a financial-literacy class for anyone who wants to take out three loans in 90 days.
The goal, Widener said, is to make the high-interest, two-week loans available for people who really need them for short-term emergencies, while breaking the debt cycle in which borrowers repeatedly take out new loans to pay off old ones.
Bill Faith, a leader of the Coalition for Responsible Lending, said the revised bill doesn't go far enough to address the debt trap. He would like to see a 36 percent interest rate -- the same federal cap placed on loans to military personnel. Both Republican and Democratic House caucuses are divided over a rate cap.
"I think (Widener) is serious about wanting to attack the debt trap, and I think they're continuing to massage the language of a bill that will get there," Faith said.
Darryl K. Dever, a lobbyist for payday lenders in Ohio, said he is stunned that Strickland would want to kill an industry and eliminate 6,000 jobs. He's also fighting the new Republican proposal, which could be introduced next week.
A current industry-backed bill would give customers one extended payment period per year. Widener's proposal would allow them to extend the terms of every payday loan.
"Any diminishing returns for that length of time is going to have some very detrimental impacts," Dever said.
[email]jsiegel@dispatch.com[/email]
source: http://www.dispatchpolitics.com/live/content/local_news/stories/2008/04/26/copy/payday26.ART_ART_04-26-08_B1_41A1L8R.html?adsec=politics&sid=101
Three payday-lending bills have been debated in Widener's commit
Three payday-lending bills have been debated in Widener's committee for months. He took some parts of those bills and added new wording that doesn't change the current annual interest rate of 391 percent ($15 per $100 borrowed on a two-week loan), but lets customers extend any two-week loan by at least 60 days.
That's ridiculous, all this will do is encourage more people to take out payday loans, in my opinion. :x
But the nice thing about he proposal is no one can have a total
But the nice thing about he proposal is no one can have a total of $500 out in loans. At least it limit people some do-able to get out of debt. And if you take out 3 loans within 90 days you have to attend a class. Maybe it will embarrass someone thinking they have to go to class.
Hopefully Ohio starts the ball on one of the many proposals now. I'm interested to see if 36% can pass in the house. I hope it does, but, it seems like if you have money you can buy the right people off.