In case you missed it, Oregonian metro columnist Steve Duin tackled overdraft fees tacked on to a 15-year-old’s Bank of America’s CampusEdge Checking debit card.

Here are two alarming facts the consumer protection group discovered in a survey of 10 banks and eight credit unions offering “low cost” checking accounts in Portland, Eugene and Ashland:

An overdraft of $20 paid back in two weeks amounts to a loan with an Annual Percentage Rate of 3889%, more than 7 times higher than what was common in the payday lending industry before Oregon established effective regulations in that market.

and

A typical customer who incurs a modest number of the different fees outlined above could pay an average of $166.24 in fees every year simply to maintain a regular checking account. This ranged from an average of $132.95/year for the credit unions surveyed to an average of $184.24/year for the banks surveyed.

“If you think you’ve got a free or low cost checking account, you might be surprised to learn that you are subject to a long list of poorly disclosed, sometimes outright deceptive fees and policies that can really add up,” says OSPIRG Consumer Advocate Matt Wallace, who wrote the report.

The real-world examples are proof of the consequences of overly restrictive annual rate caps. Hundreds of stores have closed, thousands of employees have lost their jobs and hundreds of thousands of consumers are left to choose among less desirable credit options.

Read more about annual rate caps in Oregon, Ohio, New Hampshire and D.C.

Jennifer Kindel, market manager for Cashland offices in Northeast Ohio, said they’ve closed 40 locations because of the legislation, but she didn’t give a specific number of layoffs.

Kindel said the company provided the loans for periods between 14 and 30 days, charging a flat $15 fee for every $100, not charging 391 percent interest as was the claim. The higher interest figure came from multiplying the flat fee out over a year’s time, she said.

“We’re talking about a two-week loan. You can’t take the loan out for a year. To attach (an) APR (annual percentage rate) doesn’t make sense,” Ferguson said.

She said more than 90 percent of their customers pay back the loans on time. Those who don’t are offered an extended payment program. Customers can’t take out two loans at Check Into Cash at the same time, she said.

At this risk of being repetitive, the customer’s voice is missing from this story.  What are citizens of Ohio doing to meet their short-term credit needs?

It doesn’t take an economist to understand that, for many, paying $15 for a two-week $100 loan is better than pawning a family television or bouncing checks. Sadly, Nanny State lawmakers and bureaucrat-knows-best activists have already eliminated that choice for Oregonians and Ohioans, and are pushing to further eliminate this valuable financial option across the country.

Amen.

Survey data on 400 payday loan users collected before and after the imposition of an interest-rate cap in Oregon suggest that the cap caused deterioration in the overall financial condition of the Oregon households. The results suggest that restricting access to expensive credit harms, rather than helps, consumers.

The study, conducted by Prof. Jonathan Zinman of Dartmouth College, seeks to evaluate the effects of interest-rate and loan-term restrictions imposed by the State of Oregon in 2007. Previously, payday lenders had been charging borrowers at least $15 per $100 for two-week loans; effective July 1, 2007, the maximum finance charge that can be imposed on Oregon borrowers is approximately $10 per $100, with a minimum loan term of 31 days. The effective yield to lenders was reduced by two-thirds as a result of the new regulatory scheme.

After the news of the last few days, we can either get drunk, go back to sleep, or get more determined to fight for financial choice.   These suggestions aren’t mutually exclusive, though.