The Ladder

The video to the right made the rounds on the internet this week. It's of Rep. John Husted, Republican Speaker of the Ohio House, speaking about the enforcement of Ohio's 28 % rate cap on small dollar loans.

Here are some of his key remarks:

• We as a nation of $9.5 trillion in debt. This is 31,500 per consumer. We have a consumer debt that is $8,300 per capita. That is crippling our economy as a result. We have witnessed irresponsible lending as a major factor in slowing our economy. It's not just consumers, but its very large banks and firms on Wall Street. We saw an example right here in Ohio with payday lending industry.
• It became very clear to us that we had a product in the market place that was harming consumers because of its design by its very nature to trap people in a cycle of debt. That was the business model that it was based on to ensure that customers could not pay off its loan. That is a bad business model that was harming consumers.
• Because the product was initially created by an exception in the law, we had a responsibility to look at the exemption and determine how we can find a compromise with the industry. The industry did not want to compromise. So we were left with no choice but to proceed with [the rate cap.]
• We did not ban small consumer loans, rather we capped the interest rate at a level that created a reasonable expectation that the borrower could pay it back, that they would not be trapped in a cycle of debt.
• We did not ban small loans. We banned a defective product.
• As an elected leader, I have always tried to promote the free market, I believe in the free market. I believe that free exchange between consumers and business with limited government intervention is important to our freedom and prosperity. But products that are in the marketplace that are defective by their very nature undermine the free market. They harm consumers and invite government intervention. For those who believe in the free market, they should understand that we are preserving, not harming these principles.
• [The industry] talks about 6000 jobs lost, but we don’t believe that. And we know that there are more than 6,000 people that are trapped by these products.
• I believe in growing our economy and I believe that responsible lending practices are a part of that.