News Summary

COLUMBUS — Gov. Ted Strickland wants to put a 36 percent annual interest rate cap on loans made by payday lending stores.

State Rep. Chris Widener, R-Springfield, chairman of the House committee considering payday lending restrictions, said Friday, April 25, that he is taking a different approach.

Strickland announced his position in a Friday letter to the Ohio Coalition for Responsible Lending, a group backing payday lending restrictions.

Fees now are usually $15 for every $100 borrowed for two weeks, which calculates to an annual percentage rate of 391 percent.

"It is my hope that a bill with such a rate cap (36 percent) is moved through the legislative process, and I would have the opportunity to sign this policy change into law in the near future," Strickland said in the letter.

The letter said that the state must make sure that such loans "are structured in a way that does not exploit those who are in need."

Suzanne Gravette Acker, spokeswoman for the coalition, called Strickland's letter "wonderful news."

However, Widener, chairman of the Financial Institutions, Real Estate and Securities Committee, said that his committee's research found that in states with such caps there is no short term credit available to consumers.

He said he was developing a bill with two key provisions: limiting the amount a consumer could borrow at any one time to $500 total from up to two lenders and limiting to two the number of loans a consumer could take out in a 90-day period without participating in a consumer counseling class.

Gravette Acker said this approach would not address what she called the "debt trap" of payday loans.

Darryl Dever, industry spokesman, said there are some problems with Widener's plan but that he wanted to continue working with him and his committee.

Dever said that the rate cap backed by Strickland would put payday lenders out of business and "put in jeopardy 6,000 jobs in the state of Ohio." It would amount to just $1.38 to the lender for a two-week loan, he said.

Strickland's letter came a day after Xenia City Council voted to halt for up to a year the issuance of new zoning permits for cash advance or payday lending stories while city officials study how to strengthen regulations.

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