Ohio battles over payday loan interest rate cap

[metalman]

Ohio battles over payday loan interest rate cap

Ohio, having dealt a blow to its payday loan industry by enacting a usury law, is teeming with charges of deceit in a petition drive to reverse the law.

HB 545 was signed in June by Governor Ted Strickland, and will go into effect in early September. Under the law, the APR for a payday loan will be capped at 28%, and an Ohioan would be limited to four loans per year. Opponents of the legislation argued that outlawing such small, short-term loans, with an APR of up to 391%, will eliminate 6,000 jobs in Ohio and force as many as 1,500 statewide store locations to close.

Lynn DeVault, president of the Community Financial Services Association, issued a statement saying that lawmakers "[turned] their backs on their constituents and [played] politics."

"It is a sad day," she wrote, "when the opinions of editorial writers and so-called consumer groups count for more than the opinions of the people responsible for putting lawmakers in office."

Petitions to reverse HB 545 are currently circulating. An Ohio Public Radio program airing August 12 exposed signature collectors who were incorrectly representing the petition as one that would lower the interest rate cap further. Residents of a Butler County homeless shelter also alleged that they were offered money for their signatures.

Payday loans are a debt trap, charges advocacy organization END 391, which notes that 90% of revenues from payday loans are from repeat borrowers, and about 50% of repeat loans are initiated on the same day a previous loan is paid off. Americans spend $4.2 billion in payday lending fees per year.

240,365 signatures must be collected and submitted to the Ohio Secretary of State in order to place the repeal, dubbed Issue 5, on November's ballot. Ohioans who believe they were misled into signing the petition can call 614-477-5042 to have their signature removed.

awwww, 6000 low rent fire econ jobs gone. too bad. maybe they can go into a more respectable line of work, like prostitution or drug dealing.

didn't know states were starting to fight back with usury laws. power to 'em!

[phirang]

Re: Ohio battles over payday loan interest rate cap

awwww, 6000 low rent fire econ jobs gone. too bad. maybe they can go into a more respectable line of work, like prostitution or drug dealing.

didn't know states were starting to fight back with usury laws. power to 'em!

My cousins are from Toledo, and so I know allll about the rust-belt.

Needless to say, one of them is in the state legislature (not a rep, just a bureaucrat): she said they're so desperate for cash-flow, they're dying to get casinos in Ohio now!

Why don't they just launch slave-raids on the poor and sell them to Arabs as slaves? It'd be more intellectually palatable than casinos...

[Starving Steve]

Re: Ohio battles over payday loan interest rate cap

When I was in the coin business years ago in Colorado Springs, I used to cash cheques for people, particularly people in the military. I used to hand-out $50 on a personal cheque so long as the cheque was written for the next pay-day at $80. After three successful cheques like this, I would cash $50 for $60.

To my surprise, there was no shortage of takers. And to my surprise, this was a money-losing proposition, especially with cheques from the U.S. Army recruits. I soon stopped lending to Army recruits but kept lending to the $60 for $50 group. This latter group was marginally profitable to deal with, but there was a lot of work routing cheques to the bank to clear at the precise moment that the military got paid by the government.

Now I read of some idiots in Ohio, obviously people who have never run a business and have never cashed cheques for the public before, and these idiots are trying to dictate what cheque-cashers can and cannot do. What these idiots in Ohio are going to do is make cheque-cashing totally unprofitable, and the pay-day cheque cashers will close-up. A vital service to communities will be regulated out of existence.

To my amazement in the cheque cashing game, people came to depend upon me for emergency funds. People also depended upon me for drinking money on Friday afternoons. And before Christmas, people depended upon me to cash their cheques so that they could go home.

These idiots in government should pay for the N.S.F. cheques, or the the cheques stamped "Account Closed". How about paying for government cheques that have been called-back because they were stolen and forged by criminals?

But ofcourse, the do-gooders in government don't want to assume the risks of running a business; they just want to tell you how to run your business.

[c1ue]

Re: Ohio battles over payday loan interest rate cap

And the best part is: when inflation ratchets up and interest rates soon follow, no one will lend ANY money since the 'non-usury' rates will be below inflation.

[nathanhulick]

Re: Ohio battles over payday loan interest rate cap

The only reason that this law was passed was not to protect the public from knee-cracker rates, but because the large bank, credit card, and finance companies wanted to eliminate the payday loan companies from their racket.

The law was sponsored by Republicans who take lots of campaign donations from those companies.

Here in Ohio you can charge 15% on a two week loan, which ends up being 391% APR annually. Of course, that return drops significantly if the check bounces and the payday loan company has to spend time and money trying to collect.

Not to mention the fact that lots of people who are going to file bankruptcy go to a bunch of different companies and borrow money, then close out their checking accounts and file bankruptcy.

Don't get me wrong, I think these loans are a giant rip off that take advantage of people who are bad at math (just like state lotteries), but I don't see why there is any reason to be happy that a state government is outlawing a business just because it competes with companies who donate significant amounts of money to the politicians in power.