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Bill would cap payday loan rate
Backers hail it as end to trap, but some say it will cost jobs
Wednesday, April 30, 2008
COLUMBUS — Backers say the legislation will end a debt trap that has snared thousands of Ohioans who thought they needed a quick financial fix but ended up borrowing more and more.
Darryl Dever, spokesman for payday lenders, said, however, that legislation the House is expected to vote on today, April 30, will wipe out 6,000 jobs and destroy a product that many consumers want, need and know how to use.
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Cash Express manager, Anna Blevins, is worried she may loose her job if the state legislates the check cashing/ paycheck loan business. 'We are not loan sharks,'Blevins said. ' We are kind of like your mom, if you don't have parents, we are here to support you,' Blevins added. Cash Express is located on Main Street in Xenia. The company is based in Tennessee and has 14 stores in Ohio. 
A lone pedestian walk down Main Street in Xenia were there are almost a dozen payday loan business. House Bill 545 would set a 28 percent annual rate cap on so-called payday loans and impose restrictions, such as limiting a borrower to four loans a year.
Currently, fees are usually $15 for every $100 borrowed for two weeks, which calculates to an annual percentage rate of 391 percent. Payday lenders won't make enough to stay in business under the new cap, Dever has said.
Speaker Jon Husted, R-Kettering, said the bill would "end the cycle of entrapment that consumers who've been using payday loans find themselves in."
He and Rep. Chris Widener, R-Springfield, the sponsor, were to brief the Republican caucus on the bill Tuesday night. Some opposition was expected.
Tom Allio, chairman of the Ohio Coalition for Responsible Lending, applauded the bill as "absolutely unbelievable."
"I've never seen politics change so quickly in a positive way," he said.
Widener last week outlined legislation with no rate cap but with other provisions that he said would end the debt trap. He said he added the cap after others didn't grasp his first approach.
Hearings before the Financial Institutions, Real Estate and Securities Committee, which Widener chairs, showed that instead of getting a quick fix, the average borrower was taking out from seven to 12 loans a year, he said.
Gov. Ted Strickland considers a rate cap a key part of effective reform legislation, said Keith Dailey, Strickland's spokesman. Senate President Bill Harris, R-Ashland, has concerns about limiting the ability of people to borrow but is "anxious" to see the House bill, said Maggie Ostrowski, his spokeswoman.
