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Strickland signs bill capping pay-day loan rates
Monday, June 02, 2008
COLUMBUS — With a bipartisan posse of legislators looking on, Gov. Ted Strickland has signed legislation aimed at ending the "debt trap" caused by short-term payday loans.
"This is but the latest ... one of the bipartisan efforts that we are able to celebrate together here in Ohio," Democrat Strickland said on Monday, June 2, before signing House Bill 545 at the Statehouse.
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The law, sponsored by Rep. Chris Widener, R-Springfield, sets a 28 percent annual interest rate cap on short-term loans and limits a borrower to four loans a year. The loans can be for no less than 31 days.
Under the old system, fees for payday loans were usually $15 for every $100 borrowed for two weeks, which calculates to an annual percentage rate of 391 percent.
Industry spokesmen have said payday lenders won't be able to make enough to stay in business and that the bill will wipe out 6,000 jobs.
Strickland and others said they believe credit unions, faith-based organizations and others will step in to provide short-term loans under the new system.
"We're thrilled beyond words," said Tom Allio, chairman of the Ohio Coalition for Responsible Lending, a group that pushed hard for the legislation.
Contact this reporter at (614) 224-1608 or whershey@coxohio.com.
