BuckeyeBlog

So the Ohio House passed legislation effectively banning payday lending. Why? As Republican Rep. Chris Widener said, “As legislators, sometimes we got to step up and we’ve got to do something.” Ah, yes, the desire to “do something.” Let’s forget the fact that sometimes doing something is worse than doing nothing. Politicians often feel the desire to do something, regardless of its merits, just so they can appear compassionate.

The Dispatch says, “Support increased for an interest-rate cap as more lawmakers, including Speaker Jon Husted and Financial Institutions Committee Chairman Christopher R. Widener, became convinced that the two-week loan model trapped borrowers in a debt spiral.” Too bad there is no evidence to suppor this contention. As I’ve stated here before, it is certainly true that many people who take payday loans have financial problems. However, these financial problems are not caused by the loans. Instead, borrowers’ financial problems cause them to take the loans. Eliminating the loans will not eliminate these financial problems. But, hey, legislators need to look like they are “doing something,” right?

Tags: Regulation

This entry was posted on Thursday, May 1st, 2008 at 2:27 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.