Need for payday-loan cap doubted: Lawmaker wants focus on regulation

[cashlenders]

Need for payday-loan cap doubted: Lawmaker wants focus on regulation, not interest rates

Calling the dreaded 391 percent payday loan interest rate a "fictitious number," Rep. Christopher Widener said he is pursing a compromise bill that would boost industry regulations without cutting the rate charged to customers. "I have not heard anyone say that it's not fair," the Springfield Republican and chairman of the House Financial Institutions Committee said of the current payday rate of about $15 per $100 borrowed on a two-week loan (391 percent annualized).
Widener's comments come a week after House Speaker Jon Husted, R-Kettering, said he sensed growing support for a stricter interest-rate cap among Republicans who control the House. That did not necessarily mean there was full or majority support, Husted said yesterday.
The rate cap has been the most contentious part of the debate over proposed regulations on the more than 1,600 payday lending stores in Ohio. Industry opponents most commonly cite support for a 36 percent cap -- the same limit the federal government imposed on loans to members of the military and the limit called for in House Bill 333.
A broad coalition, including advocates for the poor, say a rate cap is the best way to end the debt trap that snarls too many borrowers. A payday-lending official said yesterday that it doesn't matter whether the interest-rate percentage is capped at 25, 36, 153 or 260, because any one of them would put lenders out of business.
Seventeen Democrats, including all 11 members of the Financial Institutions Committee, signed a letter last week asking Husted to bring the bill up for a vote. But the letter did not say they supported the bill, and Rep. Sandra Williams, a Cleveland Democrat and one of the signers, said yesterday, "I'm not real convinced that 36 percent is the best way to go."
"I do not want to run these people out of business," she said, citing concerns over lost jobs and the lack of available credit.
As his committee recessed during a long, packed hearing yesterday, Widener said he's reviewing a number of options, including a statewide payday-loan database that would track who has outstanding loans. He is concerned about people who take out more than one loan at a time, he said.
"I think we've heard consistent testimony about a lot of problems consumers have, and I think we can craft a bill to eliminate a lot of those problems," Widener said.