GOP Switcheroo on Payday Lending

After blocking proposals to cap interest rates on payday lending for months, the Republican leadership of the General Assembly has made a hard pivot and introduced a bill, HB 545, that goes much further in regulating payday lenders than the leading contender, HB 333 -- interest rates capped at 28% per year instead of 36%, number of loans limited to four per year, maximum amount cut from from $800 to $500, a minimum of 31 days to pay off a loan, internet-based payday lending banned, a statewide database created.

State Rep. Chris Widener (R-Springfield), chairman of the House Financial Institutions Committee, introduced the bill. He has been squelching payday lending regulation bills since early last fall, and just a few weeks ago Widener called the 391% annual rate payday lenders get away with now "a fictitious number" and said that he has "not heard anyone say that it's not fair." He proposed a bill that repackaged the 391% interest as an "origination fee." But now Widener, the same person as a few weeks ago as far as anyone can tell, is saying the opposite. "I'm proud of where we are at with this bill, and I think we'll have the strongest law in the country," he says now. House Speaker Jon Husted (R-Kettering) is also a fresh convert to looking out for the consumer: "We need to make sure that whatever legislation we move on payday lending it ends the cycle of entrapment that has found people in circumstances they cannot find a way out of."

So what happened? It became clear that the pressure to regulate payday lending was going to be too great to resist when Gov. Strickland announced his support for capping interest rates last week, with newspaper editorial boards around the state chiming in. GOP opposition was based not on principle but on campaign contributions from the industry. When it became clear that they couldn't prevent genuine payday regulation, they decided to own it instead, attempting to defuse a powerful campaign issue in the general election. In other words, once the GOP bus stops rolling from that hard turn they made, we'll find their payday lending buddies somewhere underneath it. But Widener's credibility might be harder to find.

UPDATE: State Reps. Bob Hagan (D-Youngstown), Matt Lundy (D-Elyria), and Tyrone Yates (D-Cincinnati), each a sponsor of one of the competing payday lending bills that preceded Widener's miraculous conversion, teamed up yesterday to praise the new bill in a joint press release:

“We are pleased that real reform seems to be coming to help Ohioans dig themselves out of a dangerous cycle of debt. After the Republican-dominated House stalled on our three pieces of legislation for months, our Caucus members called for a vote on an interest rate cap on payday loans, and we’re glad the Republicans have finally responded. This bill will provide avenues for people to get financial assistance, and it will protect them from the outrageous fees and interest rates payday lenders have lived on, unchecked, for years. This will help Ohio families manage their money through financial education and avoid the debt cycle that has damaged so many people.”

The Ohio GOP is shameless

Once again the Ohio GOP stoops to a new low in political chicanery. They truly put the "ass" in General Assembly.

After YEARS of opposing any effort to effectively regulate these shylocks, and claiming that it would actually HURT consumers to limit this brutal form of usury, suddenly they turn tail and run.

I hope all of the loan shark lobby groups demand refunds on the huge donations they've given the GOP in the legislature.

Both Sides and the Resolution

The Consumers Side:
The Statement: “OUTRAGEOUS APR% is Predatory Usurious and strips wealth from the working middle class….”

The Truth: The PayDay loan APR reflected is not truly accurate. The way that it is calculated is as if you borrowed the $100 and were charged the $15 fee every two weeks for a year (but keep in mind they dont raise the amount you borrowed from $100!). Lets get real. you pay back a PORTION of what you borrow, which is fifteen percent.

Payday lenders aren’t allowed to extend credit for an entire year, so why is it fair to act as if the fees you pay back are multiplied into a yearly credit? If that were the case, take your $100 2 week loan, multiply it by 26(52 wks in a yr, biweekly loan=26 wks) $2600 is what you received in this calculated 1 year loan, then multiply the $15 fee times 26 $390 is what you paid to borrow the $2600, you are STILL only paying back 15% of what you borrowed.

It is an unfair, deceptive misrepresentation of APR if you are not taking into consideration BOTH the amount borrowed and the interest.

As for the housing market—let’s talk about fairness--and PREDATORY LENDING. I am paying back 2.5 times the worth of my house, yet my APR is 6%--it seems just a tad backwards?

A rather cliché question raised is “what happens when you give a loan to people who "cannot afford pay them back? You have the mortgage crisis that Ohio is currently in" Um--big difference between a $300 two week loan and a $200,000 mortgage that you repay $450,000 back with interest....I think I can handle the $300 bucks (and the $45 fee).

Predatory --DEFINED ---How about $4 a gallon for gas--I HAVE to purchase gas--I have no choice there, How about the increase in price of food--I HAVE to eat to live...To raise prices on things we cannot CHOOSE to survive without is Predatory. No--Im not being "lent" money when I purchase these items, but I am spending a lot of money without choice.

But HB 545 DOES give the banks a choice—if you read it, CREDIT UNIONS ARE ALLOWED TO CONTINUE TO GIVE PAYDAY LOANS OF 30 DAYS OR LESS at 10$ per Hundred….which is $5 less than Payday lenders, but get this—they can loan up to ONE THOUSAND DOLLARS! $200 MORE THAN PAYDAY LENDERS! Oh, the kicker is…they can still charge you fees for return checks, or late payments—you think that the bill is siding with the banking industry that has since seen a HUGE loss on NSF fees and OVERDRAFT FEES? Yes, Payday lenders will take credit for that, because they are HELPING the middle class worker avoid 60$ in fees for a bounced $10 check.—By the way—whats the APR on that one?

The real issues are below this superficial stage that is being set for the elections, Create your platform--take the focus off the REAL problems--we have surpassed recession (the taboo word NO ONE will use) we are headed for depression, to eliminate the choice of financial assistance further empowers our downward spiraling economy. HB 545 Cripples and devastates Ohio’s economy.
I say Thank You for free will and the ability to have choices...VOTE NO ON HB 545--its another right to choose we are having "chosen" for us.

Strickland’s Hypocrisy:
Add the Amendment of the STATE FUNDED KENO ELECTRONIC GAMBLING GAMES in the VERY BARS AND SOCIAL CLUBS THAT HE DROVE OFF A FEW MONTHS AGO??—he is feeling the pressure of his poorly and publicly humiliating budget shortfall. So He added this amendment and “backed” the HB 545? NOPE, he was just finding a way to slip his “easy fix” into a much debated bill, and as soon as he “blessed” it, a majority of the parties fell in like robots, persuaded by his new found Protection of the Little guy…Not really-Try more like a way to take more money from them.
The expanded gambling is projected to cover a $73 million shortfall in education funding.
Governor, If you are looking to protect the “Prey” of predatory lending…why are you looking to put “state funded Keno machine” in bars and social clubs? Do you think alcohol may persuade the poor middle class workers that cannot decide to obtain a short term loan for themselves, to make decisions they shouldn’t…—do you think THAT’S a little predatory? But the consumer is not benefiting from feeding these machines…HE IS.
Wow, the truth can be so ugly.

The Employee side:
FACT :Only 10% of Payday loaning customers do not pay on their scheduled due date….

Approximately 7,500 jobs are at stake, with the rising foreclosures the passing of HB 545 will only ADD to the foreclosures.
Payday lending profits BENEFIT the state--- salaries and benefits are paid to employees.
What will the unemployed do for healthcare?
What will the unemployed do to pay for the gas that is on a swift upward climb, kissing $4 a gallon?
Where will the families who foreclose due to unemployment live? Will you vote YES to add bodies to the homeless shelters?
What will the children of the unemployed do for school supplies and lunch money?
Will you vote yes to add to welfare claims?
Will you vote yes to increase food stamp pay out?
Many companies are laying off employees and shutting down plants due to the state of our economy. We’ve seen the devastating effect a layoff of 600 people can have on an economy, will you vote Yes to multiplying that effect by TWELVE?
Research shows desperate times in suffering economies lead to crime, will you vote YES to lessen safety and increase crime rates?

The Resolution:
AMEND:
Lower the loan limit to $500
Introduce the statewide database to track loans and ensure compliance with CURRENT laws governing payday lending.
Introduce a financial education program to the 10% of customers that cannot pay back their loan
Allow Payday lending at the same rate of Credit Unions 10% of Principal (a 5% decrease)
VOTE NO on House Bill 545. And Vote yes on a compromise that allows CHOICE, HELP, and SECURITY.

AMEN

I agree with everything said in this post. I am an employee of a payday loan business, and everyday I'm wondering how much longer will I be here? It's a scary thought to know that my job is on the line. Not only my job, but my money! I'm a single mother to 3 school-aged children who recieves no child support from thier father. I've recieved benefits from the state, and currently have lessened my need on that because I have a good paying job and am able to get by on my wages just fine. The gas prices are starting to kill my pocket now, and if the governor passes this law, my pocket's going to be very dry! I have tried to get off of assistance and was finally on my way off of it, but now I may just have to go back to that. Believe me, I'd rather support my family on my own. More than 6,000 jobs will be lost in Ohio if this law is passed! That just blows my mind. We are supposed to be helping the economy by creating jobs, not hurting it by taking them away!

Not only is my job at stake, but many of our customers will be greatly affected by this law. We have people who use us when they have an unexpected event come up, when they have to cover a check in thier account so they aren't charged outrageous overdraft fees, and more recently to put gas in thier cars so they can make it to work. I hope that our governor looks at the big picture before signing this law.

6000 HDL Jobs vs 6000 Payday Lender jobs

Governor Strickland is such a hypocrit. He will fight to save 6000 jobs that HDL wants to eliminate, but will vote to put 6000 other people out of a job. Most of them women trying to support their families! Shame on you Governor Strickland! How can you sleep at night?

I am a PayDay employee and I am angry that I will be losing my job, but more importantly I am angry that my customers are being hurt by this bill. Most of them are just in a panic. They don't know what they are going to do. We are the best option for them. They need us, many of them have been in tears the past month just worried sick over their bills and rising prices on everything, and now you take away the payday option and they have to make a choice of which to cut... medications, food, electricity, clothes for their kids, vacations, car repairs. And they are angry that their rights are being taken away, and they have absolutely no say in it. Put it to a public vote.

And what really aggravates me is that the house and senate have no idea what really goes on at a payday lender. They are just blindly falling for the bull the Ohio Coalition for Responsible Lending is pushing. Just because a few people are not capable of handling their finances lets punish everyone. They had people testifing who were out at 5 or 6 different lenders. What ever happened to personal responsibility? And I would venture to say most of those "poor people" who testified never paid back their loans to any of those 5 or 6 payday lenders!

Governor Strickland needs to step up and Veto HB 545. He has been taking votes on it, but we all know that is just to make it look like he is doing something for us. Veto HB 545!!!

HB 545

Totally agree with what I am reading. Went to get one, and was told because of this bill will no longer be offering their services in Ohio.
My choice to maintain my personal finances has been dictated by a few in the Ohio House? Would like to know if you can create legislation to pay my bills and expenses.
Totally disappointed in my Govenor if he signs this bill into law.

MY CONSTITUTIONAL RIGHTS HAVE BEEN INVADED!!!

It's a damm shame that the American people have NO RIGHTS anymore. The FREEDOM of personal choice!!!
Yes I use those payday loans. If they shut down, guess
what choice I have, I will go bankrupt!! along with
hundreds of other people. You want to decide my personal business, well start deciding when YOUR going
to pay my debts!!

This Mr. Chris whatever he is who decided to start this invading of our privacy, well guess what he will come up for election. I will forfeit my home to campaign to
get him OUT OF OFFICE!!!

karen 6/2/08

Election is now over...

Election Day is behind us, and America has a new leader. The U.S. has chosen “change” by electing Barack Obama. There is no doubt that change is in store for the United States. Whether the United States changes for the better or for the worse is yet to be seen. It’s obvious that Americans believe Obama will bring a positive change to our country. Obama has promised the U.S. a lot of things like lower taxes for the middle class, putting a timeline on the war in Iraq, and trimming the federal budget “line by line.” What many Americans don’t realize is that Obama has also supported the elimination of the payday loan industry. Obama thinks doing away with the payday loan industry will protect low-income, and often minority, families from being victimized by predatory lenders. However, getting rid of the payday loans is a violation of our financial freedom. Maybe Obama will give America what it needs, but taking away our financial freedom isn’t a great start to creating positive change. Click to read more on Payday Loans

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