The Columbus Dispatch says that Ohio lawmakers are getting inexplicably tough on payday lenders. Have people finally had enough?
Stunning both the payday-lending industry and consumer advocates, House Financial Institutions Chairman Rep. Christopher R. Widener, R-Springfield, made major changes yesterday to a plan he introduced last week that did not lower the current 391 percent rate.
Widener introduced House Bill 545, which would cap payday lending rates at 28 percent, limit borrowers to four loans per year, cut the maximum loan size from $800 to $500 and require that borrowers get at least 31 days to pay off a loan.
“I’m proud of where we are at with this bill, and I think we’ll have the strongest law in the country,” he said.
If enacted, the bill could spell the end of the burgeoning payday lending industry in Ohio, which has grown from 106 stores in 1997 to more than 1,600 today. The bill would attempt to encourage banks to participate in a new small-loan program though a partnership with the state treasurer’s office.
The Dispatch says that Ohio payday lenders currently charge about $15 per $100 borrowed for a two-week loan. The bill would limit the rate to less than $2.50 per $100 on a one-month loan.