Both on the minds of our friends at PDLindustryblog.

Ohio payday lenders decided to offer a different service after the rate cap passed last year.  It’s not a loophole.  From the Columbus Dispatch:

The payday issue lingers because, although the legislature created a lending license with a 28 percent cap, the rate was more restrictive than on other licenses already in law. That all but guaranteed that no payday lender would use the new license; they switched to other licenses that allow for origination fees.

Some lenders also turned out to be more creative than lawmakers expected, issuing checks instead of cash, and then charging fees to cash those checks.

Yea, you wouldn’t want business to be creative, inventing new services, meeting the needs of consumers.   It’s not  like we’re living in America.  Oh, wait, Ohio IS still part of America.

Tim Miller at Center for Consumer Freedom busts out a good line in this letter in the Mansfield (OH) News Journal:

The group behind these attacks, the Center for Responsible Lending, is not responsible at all. This lobbying organization is funded by Herb and Marion Sandler, billionaire financiers who made their fortune offering the worst kinds of subprime, adjustable-rate mortgages.

The Payday Pundit will generously post any response from CRL on these pages unedited.

Just up at the Huffington Post:

Three Democratic lawmakers want the Federal Reserve to curb charges that banks levy on customers when they make a purchase with a debit card and overdraw an account. The fees can mount up quickly and cost consumers more than their actual purchases.

The practice is known as “overdraft protection,” and consumers often don’t even know that they have the unasked-for convenience until the charges appear on their accounts.

House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.), along with Rep. Carolyn Maloney (D-N.Y.) and Rep. Luis Gutierrez (D-Ill.), sent a letter to Federal Reserve Chairman Ben Bernanke asking the Fed to strengthen planned regulation of overdrafts.

…….

Michael Flores, CEO of Bretton Woods, a consulting firm that works for both payday lenders and banks, estimates that overdraft fees brough in $34.7 billion in revenue for banks and credit unions in 2008, compared with $7.3 billion for payday lenders.

Payday loans are often vilified for their high costs, and they’re illegal in 15 states. The annualized percentage rate (APR) of interest on a typical payday loan is 400 percent or more, according to the Consumer Federation of America. But that’s nothing compared with the overdrafts the lawmakers are targeting.

As we’ve discussed here before, the Prospera Credit Union/Goodwill Industries payday loan “alternative” is  $9.90 per $100 loaned.  That’s 252% APR.   They are in Wisconsin.  So the 36% rate cap bill will shut down payday lenders as well as a nonprofit alternative.

According to this story, payday lending refom legislation has died in Illinois:

On Tuesday evening, the industry won out again as the House Executive Committee rejected Rep. Julie Hamos’ (D-Evanston) SB 1435, which would have established reasonable interest rate caps and fair finance charges on these largely-unregulated loans. Eight members of the committee voted “Present.” “It’s a big disappointment for those who have been working hard on the issue for years,” Hamos told us from the House floor yesterday.

Truthfully, we haven’t been watching this and don’t know much about it.

A new Seattle-based program that helps under-banked citizens says this:

Express loans are not designed as payday loans, but as an alternative short-term loans with monthly payments, she said. Express offers repayment terms, and the loan is reported to credit reporting agencies so it can improve a credit score if paid back on time. Borrowers get a rebate of one-third of the loan fee once it’s paid off, and no checking account is needed to qualify.

This San Fran Chronicle story says:

Microfinance lenders like Opportunity Fund provide small loans along with business coaching to low-income entrepreneurs. With a median loan size of $5,000, the San Jose nonprofit claims to create or retain two jobs per business on average.

The average payday loan is $325.  Now that’s microlending!

In the otherwise interesting story about the credit access problems of Native-Americans, the reporter repeats silly claims of “targeting”:

Today, reservations are magnets for predatory lenders. According to research by the First Nations Development Institute, Indians are more likely than any other group to be targeted for payday loans, tax-refund loans and high interest rates. Even people with a business or finance background can find themselves mired in the mess.

Industries don’t “target.”  Stores are placed where there is need.

PDLindustryblog’s take on Wisconsin.