06/10/08 Legal Loan Sharking

Sometimes you just can't win for losing. That's what Ohio governor, Ted Strickland found out this past week when he signed into law the "cap on payday lending businesses. The new law restricts payday lenders from charging outlandish fees on two week loans by placing a 28 percent cap on them. Though there are supporters of the new restriction, there seems to be more people opposed to the new law, stating that, "these people are taking away our freedom and choices a little at a time." In this instance you have to wonder, if people who choose to use payday loans are ok with the exorbitant interest fees being charged them, why does the government find it necessary to control the practice? It appears that payday lenders and those who employ them have a mutually beneficial arrangement; the lenders make a substantial profit with each loan and the borrowers receive the funds they can't obtain through a regular financial institution. I have always thought of payday loan fees as "legalized loan sharking", but then I have never found myself in the position of such great need.