Gov. Ted Strickland, of the great state of Ohio, has signed a bill that punches the rapidly growing payday lending industry in the face. As we’ve mentioned before, the bill will cap interest rates at 28% and limits consumers to 4 payday loans per year. A typical payday loan charges around $15 per $100 borrowed on a 2 week loan, which works out to an interest rate of 391%.
“We will not tolerate individuals being exposed to exorbitant rates, which does contribute to the cycle of indebtedness,” Strickland said. In the past decade, payday lending in Ohio has grown from a few hundred stores to over 1,600. The bill will likely cause most of these stores to close and 6,000 people to lose their jobs. Ohio says these jobs aren’t worth keeping:
“We want to replace jobs that are taking advantage of people with jobs that help people,” said Ohio Senate President Bill Harris, an Ashland Republican.
The payday lenders were predictably angered by the bi-partisan effort to run them out of the state. A spokesperson for the Community Financial Services Association claimed that Ohio’s citizens had been betrayed:
“It is a sad day 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,” wrote DeVault.
The industry is trying to repeal the law with a signature campaign. According to the Plain Dealer they’ll need “241,375 valid signatures across 44 counties in the state in the next 90 days.”