News
News Home
Quick Bites
Exploradio
News Archive
News Channel
Special Features
NPR
nowplaying
On AirNewsClassical
Loading...
  
School Closings
WKSU Support
Funding for WKSU is made possible in part through support from the following businesses and organizations.

Metro RTA

Meaden & Moore

Lehmans


For more information on how your company or organization can support WKSU, download the WKSU Media Kit.

(WKSU Media Kit PDF icon )


Donate Your Vehicle to WKSU

Programs Schedule Make A Pledge Member BenefitsFAQ/HelpContact Us
Government and Politics


What's next for payday lenders in Ohio?
Likely -- at least until fall -- it's business as usual
by WKSU's STATEHOUSE BUREAU CHIEF KAREN KASLER


Reporter
Karen Kasler
 
Paylenders continue to do business in Ohio, but under a different law.
Courtesy of Creative Commons
Download (WKSU Only)
In The Region:

The Ohio Supreme Court handed a big win to the payday lending industry last week by ruling that a two-week loan with a 235 percent interest rate is legal.

Statehouse correspondent Karen Kasler explains that the ruling may have been clear, but what happens next is not.

LISTEN: Kasler on payday lending impact, abbreviated

Other options:
Windows Media / MP3 Download (1:01)


LISTEN: Kasler on payday lending impact, extended

Other options:
Windows Media / MP3 Download (3:24)


(Click image for larger view.)

In 2008, Ohio had 15 times as many payday lenders as were in business in 1996, and there were more of those quick-loan stores in Ohio than the number of McDonald’s, Burger Kings and Wendy’s combined.

That year, state lawmakers passed what was called the toughest crackdown on payday lenders in the nation. It put interest rate caps on those loans and repealed the check-cashing law, replacing it with the Short Term Lender Act. Darryl Dever was a lobbyist for the payday loans industry back in 2008. 

“I don’t think ‘stringent’ is the word. I think this bill, unequivocally, ends the industry in the state of Ohio.” 

A big loophole opens
The law not only passed, but survived an attempt to get voters to repeal it. But the law didn’t end the industry.

While several quick-loan stores did shut down, no payday lenders registered under that new Short Term Lender Act. They instead issued loans under the Mortgage Loan Act, which allows for loans that must be repaid in a single installment and a maximum annual interest rate of 25 percent -- plus fees. That’s not how it was supposed to work, says Bill Faith with the Ohio Coalition on Homelessness and Housing in Ohio. 

“We all thought it was going to be a crackdown. I think the vast majority of the people in the Legislature thought it was going to be a crackdown. And the fact that they hired good lawyers and figured out these crafty little weasly loopholes to try to get around the will of the voters and the law that was passed, we didn’t think that would stand.”

But it did
A decision from the Ohio Supreme Court lets that stand. The court sided with a Cashland store in Elyria, where Rodney Scott borrowed $500 in December 2008. He was supposed to pay back $545.16 two weeks later, and the agreement he signed said the annual percentage rate of the loan was more than 235 percent, when all fees and finance charges were added in. He defaulted, and Cashland sued.

The high court said since Cashland was lending under the Mortgage Loan Act, the single installment payment and interest rate plus fees were acceptable.  And the court’s ruling also says the Legislature must clarify what it intended for the law to do. But Faith says he’s not anticipating anything from lawmakers on this anytime soon, since they’re on a summer campaign break. 

“Maybe they’ll take it up after they get back. I wouldn’t expect action immediately, but I hope they do address this down the road now that the court has finally ruled on this case.”

The industry is pleased
The original sponsor of the 2008 bill, Sen. Chris Widener, did not return a call seeking comment. Cash America International, the parent company of Cashland, wrote in a statement that it’s pleased with the ruling on what it called the unambiguous language of the law and that the ruling “confirms that we offer legal, short-term credit options to Ohioans.”

While the panic over the proliferation of payday lenders during the recession has dissipated, there are still concerns about that industry in Ohio. A Pew Charitable Trusts survey last year found 1-in-10 Ohioans had used payday loans in the last five years — the fourth-highest rate in the nation.

 

Listener Comments:

there is obviously a need for the product and nobody else is stepping up to fill the void. More nanny state nonsense enough is a enough. Ban hammers next because people my hit their fingers. leave it to Sherrod Brown to come to the rescue the guy has never needed a payday loan in his life. another example of rich politicians being out of touch with the poor and the middle class.235 percent is also misleading that's an annual percentage rate based on if that borrower borrowed the same 100.00 every two weeks for an entire year!!!!! Federal reserve payday loan study is good reference for your readers. although long and boring. it shows a need for the product. finally personal responsibility also comes into play. be responsible because only you not Sharrod Brown,me or anyone else knows your finances like you do.


Posted by: darren (Oh) on June 25, 2014 11:06AM
The real problem is the barrier to entry into this market is so high it puts off competition leaving a clear playing field for big companies. The banks have abandoned small borrowers, payday loans are a variation of a trade that has gone on since biblical times. The solution is to allow small lenders into the market, give the borrowers a chioce and the cost of the money will fall like a stone. The last thing that anyone needs is more Government intervention. http://canadaloansearch.com/payday-loans/


Posted by: botty dos (NY) on June 17, 2014 6:06AM
Add Your Comment
Name:

Location:

E-mail: (not published, only used to contact you about your comment)


Comments:




 
Page Options

Print this page

E-Mail this page / Send mp3

Share on Facebook




Stories with Recent Comments

Local Ebola concerns cause officials to pay more attention to West Africa
I have a better idea, let's secure our borders and spend those billions of dollars on our own first.

HUD and Cuyahoga Land Bank extend a housing deal for another year
Need to sale lot, and would like to know how to contact someone to see if they may be interested in the property that sat between two lots. If you can give me...

Akron Beacon Journal details abuse claims against televangelist Angley
In the early 90's I went forth for pray. And the man was anointed by the hand of God. Just a fact I will never forget

Lawmaker questions why a million voters didn't get absentee applications
He's a damn lie! I vote n all elections. I missed 1. Haven't gotten my absentee ballot and their making it hard to get one.

Thirsty Dog Brewery warns it might have to leave Akron
Why is it the city's responsibility to find this guy a location? There are a hundred realestate companies that could help him.

Kent State sends home three after contact with second Ebola-stricken nurse
Why weren't all health workers who were around Duncan quaranteened for 21 days and tested for Ebola? That's a no-brainer. Why was Vinson allowed to travel right...

New book says Willoughby Coal is haunted...and that's good for business
Would love to see a series of books that would just thrill me. I cannot wait to visit some of the locations. And revisit some of the locations I have already vi...

Cleveland Indians to continue with 'dynamic pricing'
pricing is too high for a family as well as people like me who are on a fixed income. Bleacher seats are cheaper but concessions are rediculous.

Kasich talks about faith, drugs and education -- but never FitzGerald
The idea that you can learn more by talking to a 90 year old person than from a history book is just another example of how the GOP hates education and knowledg...

Third-grade charter school students fail state testing
A partisan anti-charter group came out with analysis that ODE says is based on incorrect data. So why is this a story? It doesn't seem to rise to WKSU's typic...

Copyright © 2014 WKSU Public Radio, All Rights Reserved.

 
In Partnership With:

NPR PRI Kent State University

listen in windows media format listen in realplayer format Car Talk Hosts: Tom & Ray Magliozzi Fresh Air Host: Terry Gross A Service of Kent State University 89.7 WKSU | NPR.Classical.Other smart stuff. NPR Senior Correspondent: Noah Adams Living on Earth Host: Steve Curwood 89.7 WKSU | NPR.Classical.Other smart stuff. A Service of Kent State University