It has long troubled me that our state legislators do not pass a 36 percent APR cap on payday loans in Indiana. Ninety percent of Hoosiers agree that a 36 percent Annual Percentage Rate (APR) cap should be enacted—so what’s the hold up?
These small loans are aimed at those with an urgent need and a very low income, and payday loan operators notoriously target people of color. Then borrowers end up paying ten times the rate they would pay if a 36 percent APR cap was the law, and many end up taking out eight to 10 loans with interest rates as high as 391 percent. Why so many loans? Because payday loans usually have to be paid off in a couple of weeks. If you don’t have the money in full, you have to take out another loan to pay off the first one plus fees. This merry-go-round of not being able to pay the total amount causes a huge percentage of borrowers to end up filing bankruptcy or losing their homes.
So what about this scandal? Apparently, in Ohio, some state legislators have been taking money and trips from payday lending folks—and voting accordingly. Here in Indiana, there have also been whispers and rumors about extravagant trips given to Indiana legislators, paid for by payday loan interests. If it were true, it might explain why some of our legislators have ignored the overwhelming voter support for a 36 percent APR cap.
Again, those are just rumors and whispers, perhaps, from people who don’t understand the nuances of governance. But in Ohio, the ‘nuances of governance’ just blew up in House Speaker Cliff Rosenberger’s face, (pictured). He has recently resigned as Speaker, the FBI has raided his home and storage unit, and the Ohio Legislature has turned over all evidence in relation to a warrant, which asked in part for the following:
“Records and information containing…communications between [Rosenberger and others]… concerning: payday lending legislation; evidence of payments, kickbacks, bribes, or other benefits (such as payment of travel-related expenses) offered to, paid to, or received by, legislators of the State of Ohio…”
Apparently, Mr. Ohio Speaker was noticed renting a $660,000 luxury condo in downtown Columbus. In 2016, the Dayton Daily News reports he took a nice trip to China attended by payday lending interests. In 2017 he went to London with payday lending folks, and again that year to France for a Conference of State Legislatures funded in part by payday lending interests. In that particular year he received more than $43,000 in free travel from his payday loan friends. Who knows what else the FBI will find, but over all those years, any reform in payday lending had been axed in the Ohio Legislature.
So, what’s going on in Indiana??? Just last year, the Indiana General Assembly granted payday lenders an exemption to both Indiana’s interest rate cap of 36 percent APR and the criminal loansharking limit of 72 percent APR. If that wasn’t enough, effective January 2023, our legislature raised the payday loan limit and continued to allow them to charge rates as high as 391 percent APR. These moves left most of us scratching our heads and asking the same old question: Why?
Interestingly enough, in Ohio—all of a sudden—a long-overdue, revised payday lending bill is moving through their legislature. Soon, vulnerable, financially-strapped Ohio residents may be able to get small loans at a fair interest rate.
Wouldn’t it be nice if that could happen here,
Nancy
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