An Ohio law intended to cap interest rates on payday loans at 28 percent has been thwarted by lenders who have found ways to charge up to 680 percent interest, according to lawmakers who are preparing a second round of legislation.

The law, the Short-Term Loan Act, was enacted last spring and upheld in a statewide referendum in November. It decreased the maximum annual interest rate to 28 percent, from the previous 391 percent. Loans typically had terms of two weeks and were secured by a postdated check and proof of employment.

But more than 1,000 stores have obtained licenses to issue short-term loans under different laws that permit higher rates, according to a report by the Housing Research and Advocacy Center in Cleveland, which has worked to lower interest rates.

So lenders got legitimate licenses issued by the state to offer a different kind of product.  It goes to show that there is no pleasing so-called “consumer” groups.  They want stores to close, period.

During the hearing, Democrats floated the idea of setting caps on interest rates. “I think people have had it up to here with financial firms,” Sen. Bernie Sanders, (I., Vt.), said at the hearing. He added that, “One way that we can go forward is putting a cap on interest rates.”

No, the Payday Pundit is not name-calling.   The Senator from Vermont is a self-declared socialist.

How evil of them.

Supporters of the statewide ban on payday lending said they were still concerned that a loophole could potentially allow banks to take advantage of down-on-their luck customers.

“Unfortunately the new state law doesn’t apply to banks because they are regulated at the federal level,” said Yes on Issue 5 organizer Bill Faith.

The Parrot obviously believes that government should make decisions for people.  This seems strange coming from a Armed Forces veteran, given that his service is allegedly to defend the rights of our citizens.  Instead, he seems to favor a more Fascist style of government where people’c choices are ripped away from them by government.  Of course, there are no alternatives to payday loans that are equally or less expensive.  If there were, people would obviously choose a less expensive option. 

“I hate that I have to use payday loans but it helps me when I need a little extra,” he said.

The 45-year-old electrician said he’s used the loans about seven times this year because his schedule was cut down to about 45 hours a week. He needs every hour he can get to dig him out of bankruptcy, pay child support for his two young daughters and cover their health insurance, which has gone up over 57 percent in the last year, he said.

Maybe he can call Bill Faith for a loan next time.  

In Van Wert, Issue #5 was easily upheld, 59 percent for to 41 percent against. Statewide, the referendum agreement was even more pronounced, winning by nearly a 30 percent margin.

In response, the parent company of Cashland Lending Stores announced on Wednesday morning that they would initially be closing 43 locations around Ohio, or about 1/3 of all storefronts in operation in the state. They did not release which sites were to be closed but that it would affect about 150 employees.

An effort to repeal caps on so-called “payday loan” interest rates in Ohio appeared headed to a resounding defeat statewide.

In early returns, the payday loan issue, Issue 5, showed 69 percent of voters in favor of keeping limits on how much the industry can charge and only 31 percent against it, a rare “yes” vote for a statewide initiative.

“I’m always a little bit skeptical when crusading members of the media or elite activists who don’t share the pigmentation nor the ZIP code of the people they are alleging to save start talking about ‘these people’ being taken advantage of,” Innis said during a spirited debate yesterday at the City Club of Cleveland.

“This feel-good activism can often have the stench of paternalism and a fundamental belief that working-class Americans are incapable of making their own financial decisions.”

The Payday Pundit thinks Niger Innis has summed it up nicely.

Bill Faith and the Ohio State Legislature needs to keep their noses out of our personal business…….They, the legislature, who have no idea what regular people have to do to keep their heads above water, do not need to decide our fates.