Ohio weighs the payday on loans

COLUMBUS: Despite the seeming complexity of problems in addressing the payday lending crisis in this state, there are really only three thorny issues that need to be resolved.

This was made abundantly clear last week as the legislature began hearings on three distinct proposals.

Before you applaud lawmakers for their proactive instincts, understand that they have been sitting on this issue through most of 2007.

Ohio Attorney General Marc Dann has launched a different assault on payday lenders. He is holding public hearings around the state and placing witnesses under oath.

Under oath means you can't lie, cheat, fudge — although Oliver North taught us you can forget.

So now lawmakers are banging the gavel and asking the questions in comfortable committee rooms where the minutes are scant and no one is asked to raise their right hand.

Lawmakers, with three distinct bills before them, must agree to an interest rate that a payday lender may legally charge and they must find common ideological ground on the role of the state in overseeing these storefronts.

The most difficult task they have is addressing the demand with a legitimate and fair supplier of short-term affordable loans.

Ohio once again has the dubious honor of being one of those states where a predatory industry has gone wild.

Payday lenders are a relatively new phenomenon, but there are more stores in Ohio right now than Wendy's, Burger King and McDonald's restaurants combined.

They are allowed to charge up to 391 percent in an APR by assessing $15 on every $100 they lend over a two-week period.

The industry maintains the 391 percent is misleading because it's an annual rate and these are short-term loans.

But if you borrow again and again, every two weeks, a cycle that is far too common among their customers, then do the math and you will see the interest rate begins to trend toward 391 percent.

It's usury at that point.

The industry-backed bill, sponsored by state Reps. Ross McGregor, R-Springfield, and Matt Lundy, D-Elyria, will not change this. Instead, they are concentrating on educating the masses and giving customers a one-time break to extend their repayment period.
source:http://www.ohio.com/news/willard/12542476.html