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Payday lenders propose using CU code for fees
COLUMBUS, Ohio (5/14/08)--Payday lenders in Ohio have proposed using state credit union regulations for interest rate caps so they can charge more fees. If the industry proposal was enacted, payday lenders would be able to operate under a seldom-used section of the Ohio revised code that permits credit unions to charge 18% annual percentage rate and up to $10 for every $100 borrowed for a one-month period (Cleveland Business News May 12). House Bill 545 passed in the Ohio State House and could be voted on in the State Senate as early as this week. However, the statute that the payday lenders want to be regulated under may soon be gone. The Ohio Credit Union League agreed Friday not to protest the removal of the statute that payday lenders want to be regulated under, John Kozlowski, league general counsel told the newspaper. Credit unions have not used the statute, which was originally sought by credit unions to ease interest rate caps so they could create loan products to compete with higher-cost payday loans, Kozlowski said. Credit unions used their creativity to come up with short-tem signature loans and payday alternatives such as StretchPay--two products that are below the state’s 24% interest cap, Kozlowski told the paper.
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