"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.

Let's eliminate your job, you predatory prick.

"What have you accomplished here? You've eliminated a product that people need, and you've eliminated jobs..."

I'll give you the latter, but the former is certainly hogwash. I'm sorry, but if you're in dept so deep that the only way to perpetuate your lifestyle is to borrow more, than you really need to rethink your life. For hell's sake, the interest rate on most credit cards is far, FAR below 28%, let alone the ungodly 391% APR that this bill is protecting against. I can't feel sorry for people who actually bury themselves in greater debt than the kind they're trying to solve. Get a second job, sell/downgrade your house, anything but giving these shady, amoral business a cent of your hard-earned cash.

Payday lenders create jobs and fill a need for people that can't get help elsewhere.

Just like the meth industry.

This reminds me of when the United States was setting up the national Do Not Call list, and telemarketing companies complained that they were losing revenue and jobs. If you provide a ridiculous service, then it's only reasonable that you'd lose your job when people have had enough.

This is like drug dealers complaining that anti-drug laws hurt their revenue.

Well, Daryl-from-the-article, maybe if your industry had behaved itself a little bit better and acted less like leeches, this face-punching bill would never have gotten off the ground.

Yeah!!! Now the banks can take the business and the losses will be eaten by the taxpayers. Big win for banks!!!

These payday lenders will probably just have to up the ante and give out larger loans to customers.

Then again, they could see a larger demand for their business since the rates are capped.

However, I'm sure that some of these places would do well to implement an "application fee" and a "credit check fee" to subvene the costs of underwriting... I forget who the commenter was yesterday (or a few days ago) who suggested that might happen.

Even 28-38% seems high to me. Then again, these places do need to make a net profit after all of the people take the money & run.

This bill makes me dance a little in my chair, and I'm not even an Ohio native (or an American, for that matter). I hate these places, and I'm all for smacking them down and HARD!

I don't see how this would shut down payday lenders. It just doesn't allow them to gouge the guy who needs money before his next paycheck. They can still exist, they just won't be as rich. They're definitely not pulling any heartstrings with saying these people will "lose jobs".

Aren't there already usury laws on the books? Isn't that why loansharking is illegal? Do we really need more laws to prevent idiots from themselves? Can't existing laws cover this?

My god! Logical legislation in Ohio!!!

Legislators in Columbus like to do things like destroy class action lawsuits for the working poor and declare a day off on Reagan's birthday.

Holy crap...even in the Middle Ages the interest rate was only about 40-50% or so.

I thought the payday loan place that Gary Coleman was hocking was bad, but compared with 391% interest, that 99% APR looks like a positively good deal...

@Cattivella: Simple math. This WILL kill the payday lending business. I'm not nearly knowledgeable to know if thats a good thing or not, but it will.

Here is why this kills the industry. That 391% APR is based on a 2-week loan. The interest on a $500 loan at 38% is only a couple of dollars over that two-week time frame. To make any profit from that loan (even if you charge a processing fee) you would need to keep your default rate under 1% and make thousands of loans each period.

The people taking these loans will still need the money. Im willing to bet we will see an uptick in theft illegal loansharking.

I kinda understand where some of the arguments are coming from. I would rather there be a choice that I can refuse then getting rid of the choice completely. This here:

"The coalition wanted to limit borrowers to six loans per year, but the bill imposes an even tougher four-loan limit."

seems strange on the surface. Limiting the interest rate, great! Limiting how many times you can use a product...not so much.

@cubejockey: What? The working poor are a class with causation to sue?

@Corydon: The kicker with CashCall is that I believe the minimum loan amount in many cases is $10,000. With a fixed payment plan and you cannot pay additional towards principal, as far as I've read.

So, a $10,000 loan at 99% APR works out to be roughly $40,000 at the end of the repayment term. They even show this on their web site, it's frightening.

This whole thing is dumb. The State government shouldn't be getting involved in this kind of stuff. I'm certainly glad I don't live in Ohio. Maybe next they will limit how much a restaurant can charge for steak, and how many times you can eat there per year. Payday loans only developed because there was a need for them. When they all close down because they are no longer profitable, where is the person who need a quick $500 to get their car fixed so they can get to work going to get it? The people who use these places have terrible credit, likely no credit cards and obviously don't have anywhere else to get the money. These kinds of laws are bad news and unnecessary. What happened to personal responsibility?

Ohio being progressive? I've heard it all.

@Cattivella: True if anything, the loans should be more attractive and generate more loans. Less incentive to open a payday loan shop though.

@Pylon83:

Substitute the word 'heroin' for 'payday loans' in your post and it will make just as much sense.

Those stacks of bills in his hands represents the interest you paid for a $100.00 dollar loan for one week.

@Pylon83: The situation you are describing is what the payday lenders want you to believe. However statistically it has been shown that in reality, well, the people borrowing the money are basically retards. They use the money for booze or a TV, or whatever they fancy. While you might say the government doesn't need to regulate people's stupidity. However, these people are in fact a drain on the state's resources via welfare, or other social services these people end up using after they're totally broke.

lol. I love how people are cheering goverment restriction.

What business are you in? How much money do you make?

Tommorow the goverment will pound down you door saying, sorry thats just too much profit.

Payday lenders, give money to people that cant get a loan anywhere else. most have no credit check, and charge no fee's other side the interest.

If your in a bind, and need cash today, then the 800 bucks you borrow might cost you 100.

Now you can't get that loan period because the goverment says no.

The people that support rules like this are nuts.

As someone who lives in Ohio (and whose community is blighted by no less than 6 of these shops for a town population of roughly 20k) I am overjoyed about this. My wife works with many people who frequent these places to make ends meet only to go back and back because they couldn't repay. It makes me sad.

@laserjobs: banks won't make any more off of this than they already do. I used to collect on overdrawn accounts in my hometown and I would say 90% passed a check to "cashland" or an analogue and it overdrafted their account. So really these people are getting it on both ends, and often.

I just hope that community banks like the one I left step up to the plate with reasonable short-term loan alternatives. When I suggested to my old boss going under the FDIC's new pilot program for short term loans, he said that the overdraft account protection was their company's way of handling such a circumstance. Sounds like bullshit to me.

@ mizmoose: payday lenders are exempted from usury laws. The usury limit in Ohio is 25% APR, but somehow these guys get around it. I think it has to do with length of loan or something like that.

@opfreak:
lol i laugh back at you. Where do you bank at? Can we poor people get a loan for 500 bucks a 5%?

@FLConsumer: It's high for loans with several month durations, like credit cards, or several years, like credit cards that never get paid or car loans. It's average for two week loans because it still doesn't generate much interest.

Look at it this way: For two weeks, 400% APR comes out to roughly $15 for every $100 borrowed. I'm paying over twice that on a bad five-year car loan (12% APR). With my good credit I could have gotten as low as $18 to every $100 on the loan, but that's another story.

In any loan situation, the victim is the party that follows the loan agreement when the other does not. The victims, according to the OCRL, are the poor borrowers who aren't paying back their loans on time. Instead of easing the burden of the poor and uneducated, they squish the people making profit. That's like the wife lashing out at her husband's mistress when she catches them in bed.

Payday loans have an unbelievably high rate of default, because the consumers seeking them are high risk and can't get the money anywhere else for good reason. Now those defaults will be guaranteed by the taxpayers of Ohio. Congratulations Ohioans!!

Besides that, banks doing business in Ohio are not required to step in and provide these types of loans. Reputable banks won't enter the business, and the banks that do enter this business will find ways (fees, etc.) to make money. The bank will get its application fee, processing fee, etc. fee up front, then when the loan doesn't perform, Ohio taxpayers will reimburse the bank for the funds loaned.

I don't have any fondness for payday lenders, but this makes absolutely no f*cking sense, unless you're a politician trying to look sympathetic to the poor squeezed consumers, most of whom aren't getting these kinds of loans to begin with.

I used a payday loan once. It helped me out of a tight jam. Getting my car out of the inpound for back registraction just in time for me to start a new job. If I didn't have that pay day loan I wouldn't of been able to start my new job. I would of coutinued down the wrong path.

Just kidding, I spent the payday loan on drugs and hookers.

BEST. HEADLINE. EVAR.

I hope this sets a precedence that all other states adopt.

A loan shark by any other name...

@cubejockey

lol, even people with good credit, wont get a bank to give them a blank check from a bank @5%.

in general being poor, does not mean you cannot get credit. Have terrible credit means you can't get credit.

These places filed a need. High risk loans to people with terrible credit.

heck, the default rates on credit cards can/are higher then these places are.

Maybe ohio needs to pass a law. Only 4 credit card purchases a year.

It's one thing for a lobbyist to BUY a politician, but he went so far as to MARRY a politician. Now THAT'S commitment to the cause! He can lobby 24/7, not just when the politicians are at "work", like other lobbyists.

I guess she had a choice between supporting her husband's loan shark buddies or get re-elected voted accordingly.

"What have you accomplished here? You've eliminated a product that people need, and you've eliminated jobs,"

Huh.

Did the same thing when we outlawed slavery, too.

@blackmage439: I'm not arguing for payday loans, but let's assume that I come down with some dire illness and I need, say, $500 rightnow in order to pay for treatment/medicine to make it go away and not get worse.

My current lifestyle basically is come home, go to bed, go to work, repeat, and I don't exactly earn much ($8.50/hr * rand(38,42)). I don't have a lot of savings built up because of a lot of beginning expenses.

I'm not saying they're a good thing. I'm just saying, sometimes it can't be helped.

Creating a government-backed way to give short-term loans like this without having a huge interest rate and making them payable by actual humans would be a good thing, because right now, anybody who would need some quick cash for something would be mostly screwed.

This is absolutely wrong, just because we hate their service that gives us no right to deny what they do. Yeah they're sleezy and try to rob you blind but so do so many other industries and companies. Seriously people, this law only protects IDIOTS or DESPERATE FOOLS from themselves. We're all educated and know way better than going to these places but some people need it and we shouldn't deny them because we don't like it.

Same thing as the smoking ban, ban on gambling, blah blah blah blah more government, yay, thank you.

@Pylon83: Cry me a river.

I love it when the government tells me what I can and can't do with my own money and restricts my choices.

I love it even more when the government puts people out of work and calls it "progress".

It's easy for people who have nothing to lose to call for a ban. They have nothing to lose. Their jobs aren't on the line and they have likely never used (or even needed) a payday advance.

Cap it at a level that lets the industry survive.

All you fools who think this is Ohio being Progressive are dead wrong, this is Ohio politics being owned by bankers.

This was not done to control a service that people need (have you noticed the demand?), but a servie that has been abusing their position. This is legislation to KILL an industry without any alternative for people.

I don't think the commenters here have spent enough time broke to understand. Food or a usurious charge? You pick.

Payday loans are not bad in concept what is bad is the excessive amount of interest that is charged - this causes a need to refinance and results in a higher default.

It is claimed that the lenders are required to charge the amount b/c (1) that is what the market will bare, or (2) they have huge overhead costs. However it seems that the practices that they endorse (high interest rates and expansion) typically result in the justifications for their actions (that there is a greater risk of default or a greater demand).

Payday loans are a type of subprime lending except they are geared to threaten people already prone to bad credit with worse credit, making them dependent.

This practice is similar to lawyers or doctors charging outragious fees so that clients do not suffer disaster. No one really believes that these industries shouldn't be regulated so at the very least they can be disciplined by the state for not giving professional service.

People should instead look to alternatives - perhaps microlending. aka www.kiva.org which ironically can be incredibly profitable, help build small business, and improve credit.
[en.wikipedia.org]

After all do people really think that the unfortunate like not being able to pay their bills or earn money? Sometimes investing in people actually means taking a chance and having faith in them rather than screwing them.

@Pylon83:
How isn't it in the state's interest to protect its citizens? In fact this is one of the state's primary functions. Here it is everone's interest to avoid chronic borrowers.

Perhaps a little reading might do everyone a bit of good.

"[D]espite its expanding customer base and notwithstanding industry denials, the financial performance of the payday loan industry, at least in North Carolina, is significantly enhanced by the successful conversion of more and more occasional users into chronic borrowers." [edq.sagepub.com]

"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

Did he then follow up by saying, "All you've done is weaken a country! I'm gonna rip the eyes out of your head and piss in your dead skull! You f--ked with the wrong loan shark!

@flaxen_vixen: Do you operate a payday loan business? Because I can't quite see where your money comes into play here.

@Curiosity:
Don't take my support for the payday loan business as a claim that it is not predatory. I fully recognize the predatory nature of the business, and I won't argue otherwise. However, my thoughts are "so what?" Who cares if its predatory, all businesses are. A restaurant's financial performance is enhanced by the successful conversion of more and more occasional diners into chronic diners. Where is the personal responsibility? Why does the state need to step and in protect people against themselves? This isn't a law to protect people from drunk drivers, or from people driving dangerous vehicles on the road, it's a law to protect people from themselves, and it is unnecessary. The state should not have to play "mother" to all the people who chose to use a Payday loan service.

@chrisjames: To be honest, prior to reading The Consumerist, I had no idea that interest rates >15% existed. I'm used to seeing #'s like 7.5% on my credit card statements (never carried a balance 'though) and seen ~7-8% loans from my bank whenever I needed extra capital to start up a few ventures.

I agree that the payday loan places tend to take on very high-risk loans.

Unfortunately, it appears most of the payday loan places are private companies. Very curious to see what their net profit is. These places seem to be popping up all over in Tampa, so obviously they're not hurting for business, nor are they unprofitable. Granted, at 300%+ interest, you can have quite a few people default on you without worry of not making a profit.

@BigElectricCat:
His money comes into play because Ohio is limiting a person to only 4 loans per year. If you're going to make comments, informative/insightful/thoughtful comments tend to contribute the most to discussion. Comments like "cry me a river" or "You must own a payday loan company" add little value, and are rather pointless.

Kucinich is the guy that makes things like that happen in Ohio, a great congressman.

@Xkeeper:

Not to be an ass...but the internet isn't exactly a necessity that you'd die without. There's always the library for situations where you need a computer.... And if you're commenting from work...well...that's why you're not getting that promotion.

I know it sounds harsh, but after seeing my parents move from a 3rd world country to the USA with literally nothing, deal with nearly every obstacle imaginable, save up enough money to attend college, and graduate medical school, I have a hard time feeling bad for people who make excuses and pretend they are giving it everything.... I mean, donate plasma if you have to, or work at a McDonald's in the evenings...etc.

@Pylon83:

"His money comes into play because Ohio is limiting a person to only 4 loans per year."

That's irrelevant to the question I asked that poster. Would you like for me to restate the question for you?

"If you're going to make comments,
informative/insightful/thoughtful comments tend to contribute the most to discussion."

I look forward to seeing some comments of that nature from you.

"Comments like "cry me a river"

I judge this comment of yours -- "Who cares if its predatory, all businesses are" -- to be specious and jejune. Clearly many posters here *do* care, whether you do or not. Perhaps you should make a informative/insightful/thoughtful comment on that score, rather than throwing your figurative hands up and saying "who cares?"

"or "You must own a payday loan company" add little value, and are rather pointless.

I didn't *say* "You must own a payday loan company," so your enclosure of those words in double-quotes (thereby making it appear that you are quoting me) is misleading and dishonest. I asked that poster a *question,* and unless you can answer it for them, I'd venture to say that your reply on that score adds little value, and was rather pointless.

Again, would you like for me to restate the question for you?