Ohio’s House of Representatives passed the ominous face-punching legislation that will, if passed by the Senate, become the strictest payday lending regulation around.
After months of debate over bills that were backed by either the payday industry or consumer advocates, the proposal that passed the House 69-26 is a victory for the Ohio Coalition for Responsible Lending, which pushed to lower the current 391-percent annual interest rate on two-week payday loans.
The group got a bill even more restrictive than it requested. It sought a maximum 36 percent interest rate and got 28 percent. The coalition wanted to limit borrowers to six loans per year, but the bill imposes an even tougher four-loan limit.
“It sends a really strong bipartisan message that we want to first be about protecting consumers in Ohio,” said Bill Faith, a leader of the coalition.
Meanwhile, the payday industry, which was talking optimistically a few weeks ago that lawmakers were not supportive of an interest rate cap, got steamrolled.
“What have you accomplished here? You’ve eliminated a product that people need, and you’ve eliminated jobs,” Daryl K. Dever, chief lobbyist for the payday industry in Ohio, told the House Financial Institutions Committee before it OK’d the measure this morning.
Even people who are married to lobbyists working for payday lenders voted for the bill, says the Dispatch:
House Minority Leader Joyce Beatty, a Columbus Democrat who in the past questioned the need for an interest-rate cap and whose husband is a lobbyist for a payday lender, voted for the bill.
How about that. Now the bill goes to the Senate, but a tipster tells us that it is popular with the Senate President and could pass as early as May 6.
Payday-lending bill passes Ohio House [Dispatch]
(Photo: taberandrew )
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@BigElectricCat:
Ah, a nice snarky reply. At least my comments provide an alternative point of view, rather than simply taking pot shots at people. I agree that I misquoted you, and for that I apologize. However, what I had in quotes was essentially what you said. You were clearly accusing him having a stake in the Payday loan business. And when I said “who cares”, I followed up with information as to why I feel it shouldn’t matter, I didn’t simply “throw up my hands” as you accuse. Again, next time, how about a comment that actually adds something to the discussion, as opposed to a snarky attack?
@Pylon83: Look, pal — your original comment, to which I responded was “This whole thing is dumb.”
That’s not very informative/insightful/thoughtful, now is it?
“Ah, a nice snarky reply.”
I give what I get.
“At least my comments provide an alternative point of view, rather than simply taking pot shots at people.”
I’ve got one of *your* pot shots below. Just keep reading.
“I agree that I misquoted you, and for that I apologize.”
Accepted.
“However, what I had in quotes was essentially what you said.”
Nope. You are *quite* incorrect.
“You were clearly accusing him having a stake in the Payday loan business.”
Better restart your Windows For Telepaths software. I quite clearly *asked* if the person had a stake, because it’s not clear to me what “money” that poster refers to *unless* they have such a stake. Unlike your presumptive self, I prefer to *ask* people for clarification, as opposed to leaping to conclusions and hurling unwarranted accusations.
“And when I said “who cares”, I followed up with information as to why I feel it shouldn’t matter, I didn’t simply “throw up my hands” as you accuse.”
No. You presented your *opinion,* which is fine as far as it goes, but I wouldn’t go so far as to call opinion “information,” no matter from whom it emanates.
“Again, next time, how about a comment that actually adds something to the discussion, as opposed to a snarky attack?”
How about you do the same, Mr. “This whole thing is dumb?” Police your own posts, and I’ll police mine. And grow a thicker skin while you’re at it. The internet’s full of people who aren’t necessarily going to agree with you, so learn to deal with criticism and disagreement.
@laserjobs:
Every time one of these stories comes up you make mention that now the banks have no competition. Personally, I haven’t seen a single bank that engages in payday loans. Do you have evidence of a bank that does?
@FLConsumer: It’s not about high-risk loans at all. Fees and excessive APRs are used to alleviate high-risk loans. For a two week payday loan, 400% APR is not excessive at all. At that interest rate, the place earns less money than a decent car loan generates, as per my example. The length of the loan has a huge impact on the return on investment. At 28% APR, the return on investment is 1%, $1 for every $100. That’s not just squeezing the payday lenders, it’s murdering them. The high-risk nature of payday loans leads to nasty fees, which I haven’t yet read if this law will forbid.
@Curiosity: It’s the state’s job to protect its citizens when they can’t protect themselves, not when they can protect themselves but don’t want to; not ever. Would you want to shoulder the responsibility of someone who can bear it, but refuses to do so themselves?
exactly. the government is to protect those who have no protection. Especially the poor. Not everyone is a CPA. There are dozen of payday lenders in service-laden Ohio cities where the entire average working wage goes towards rent, food, diapers and hopefully college tuition. There is no safety net.
@Cattivella:
Comment on Ohio Passes Legislation That Will Punch Payday Lending Industry In The Face Payday Lenders are predatory agencies that prey upon the hapless victim
looking to get out of what they think at the time will be a short-term
situation. At the time the terms, which are openly expressed before you
sign your life away, appear to be doable because while you don’t have the
money now, you will in two weeks.
Two weeks shows up and you are in a situation that left you no better than
where you were. If they are the type of company that lends out every two
weeks and doesn’t “extend” the loan, you are back to square one and should
simply consider it a lesson learned. What really gets my blood boiling are
the places that extend the length of the loan by another 2 weeks, and then
another and another. Finally, you have fees coming out the ass that you
were never ready to pay for in the first place with little or no recourse.
The borrower is stupid for thinking the one payday loan was going to solve
their problems. The lenders are downright offensive thinking that what they
are doing is providing a service to their customer base. As times get lean
and we look towards the prospect of getting second and third jobs just to
keep food on the table and ourselves out of debt, there should be less
options like these available to consumers to avoid them from getting too far
gone to begin with.
If you are currently in an agreement with a payday lender and you are
running behind in your situation, check with the laws in your state and how
loans are regulated. There is a good chance that the lender didn’t even
follow the letter of the law and what you took out is likely all that you
will owe, sans the fees and collection activity. Get the information from
your state’s online site, and get in contact with your lender. Make
arrangements – just like any creditor – and get a payment plan going. If
your loan’s fees and terms are in excess of what your state legally allows,
while you still owe the principal you likely could get out of the fees.
Consult an attorney if you need to – but get out while you can.
@satoru:
Booze or TV.
Riiight. Not everyone that has taken out a Payday loan has done it so they can buy something they couldn’t afford. There are people on the other side of the fence that have used those services before to get out of a tight spot they [or some other outside factor] have put themselves into.
I’m not saying they were any wiser in making the choice to go with a payday advance, but not to make a sweeping generalization that everyone who takes out the loans is doing for shits and giggles is pushing it.
Trying to legislate market forces on pricing and availability in any industry rarely has positive results.
It’ll force people who do rely on payday loans to simply go to more places to get around the “annual limit”. That part of the law is D.O.A.
It’ll be interesting to see if the companies simply pull out of Ohio, or figure out another way to get around the restrictions.
opfreak:
THIS. Definitely. It’s a good start, but people aren’t going to stop spending money they don’t have yet, so how come payday lenders get the smackdown so that credit card companies and banks can rake in late payment and overdraft fees?
I took out several payday loans as an undergraduate student and found myself far more in debt than when I started. Quite frankly, payday loans are just too accessible to those who are unable to pay back loans. Lenders should be paying more attention to my ability to repay loans and other borrowers’ ability to repay their loans. I got sucked in and couldn’t get out and the case is the same for many other Ohioans. I’ll be paying down debt for quite some time and I’m thankful that HB 545 will prevent others from heading down a similar path.
This is really harsh with these payday lenders. The law makers should consider that the nature of payday loans is such that the high APR is not at all valid here. After all the consumer borrow this loan hardly for a month. Anyway the bottomline is that the consumer is going to suffer.