Catholics join call for payday loan reform
CLEVELAND, OH (Catholic Universe Bulletin) - The Catholic Conference of Ohio has joined the state’s religious leaders in a campaign for payday lending reform.
The bill remains in a house committee. There has been one public hearing on it, but there has been no movement to bring the bill up for a vote.
The proposed bill would cap what the group called the “exorbitant” 391 percent interest rate typically charged to some of the 300,000 Ohioans by the payday lending industry each year.
“More harm than good has come (from payday lending) for people in need of cash,” said Jim Tobin, associate director of the Catholic Conference of Ohio, the public policy arm for the state’s Catholic bishops.
He said the bishops are concerned for people caught in a “spiral of indebtedness.”
‘It’s expensive to be poor’
Rabbi Susan Stone, director of Cleveland’s Hebrew Free Loan Association described how the most financially vulnerable people don’t have access to traditional loans from banks.
The association works with hundreds of Greater Clevelanders daily to address what she called the payday lending “debt trap” as well as predatory lending practices.
“It’s expensive to be poor,” Rabbi Stone said.
The working poor, she explained, resort to high-interest payday loans, so called because they are made against a person’s next paycheck. At times, she continued, people are taking out additional short-term loans just to cover the payment of a previous loan.
HB 333 is a bipartisan effort to address the high fees currently charged on payday loans. It is co-sponsored by Rep. William Batchelder (R-Medina) and Rep. Robert Hagan (D-Youngstown).
The bill would cap the annual interest rate on such loans at 36 percent. It would also promote consumer financial awareness education and would limit to six the number of payday loans any individual could take during a year.
Payday lenders have opposed the measure, citing the expense of processing and carrying such loans.
333 gets the nod
Two other payday lending reform bills are up for consideration, explained Tom Allio, director of the Cleveland Diocesan Social Action Office and chair of the Ohio Coalition for Responsible Lending. “House Bill 333 is the most comprehensive,” Allio said, during the news conference.
Craig Forbes, senior legislative aide to Rep. Chris Widener (R-Springfield), chair of the House Financial Institutions, Real Estate and Securities Committee where HB 333 remains, said there are no plans to bring the bill to the floor for a vote.
“We’re just waiting to see what the committee members have to say about this bill,” he said.
Batchelder, who joined the news conference, encouraged Ohio voters to contact their representatives to urge passage of the bill.
Coalition statistics for 2006 showed that nearly 64,000 people within the eight-county Cleveland Diocese were involved in payday loans. Fees charged on these loans during 2006 totaled more than $64 million.
The coalition’s religious leaders urged members of Ohio’s faith community to go online to sign what they call their Faithful Pledge. The pledge denounces what coalition members call payday lending’s practice of “modern day usury.” The pledge can be found on OCRL’s Web site at www.ohiocoalitionforresponsible lending.org
This story was made available to Catholic Online by permission of the Catholic Universe Bulletin (www.catholicuniversebulletin.org), official newspaper of the Diocese of Cleveland, Ohio.
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