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Ohio Senate must not bulldoze taut reforms for payday lenders
TweetSome payday lenders in the Mahoning Valley and throughout Ohio are no doubt sitting pretty these days, thinking that efforts to rein in the shady practices of some in their industry have been torpedoed.
Unfortunately for the interests of fairness and consumer protection, their reasoning looks to be sound.
That’s because the Ohio Senate has been stonewalling efforts to curb the unscrupulous gouge-the-consumer antics of such lenders merely through its inaction.
Specifically, the Senate has failed to schedule any hearings on House Bill 486 sponsored by Democrat Matt Lundy of Elyria, a bill that passed with bipartisan support in the Ohio House more than two weeks ago.
Sound provisions of the bill
Lundy’s bill closes several loopholes in the payday-lender reform act approved by the state Legislature two years ago on June 2, loopholes that have permitted these lenders to carry on business as usual.
It’s unlikely that the bill can wind its way through the Senate before the General Assembly adjourns for summer recess in two weeks. After all, it took nearly a year to achieve passage in the House.
House Bill 486 would bar lenders from issuing loans by check and then charging a fee to cash the check. It would prohibit charging origination, credit-check and other fees during a 90-day period for checks less than $1,000. Lenders would also be prevented from charging broker fees, supposedly for credit-repair counseling.
Thwarting discussion, debate and a final vote on these safeguards in the Senate not only allows the shameless lending practices with sky-high costs to consumers to continue, it also subverts the will of the Ohio electorate.
Although the initial reform law to cap interest on payday loans at 28 percent was passed in June 2008, the legislation faced a statewide referendum challenge that November. In that election, 64 percent of Ohio voters approved keeping the law intact.
Immediately thereafter, some payday lenders began to adopt some of the aforementioned practices not specifically outlawed in the act that allowed them to keep their profit margins high, while keeping legions of Ohioans in a vicious cycle of long-term debt.
WHAT OPPONENTS SAY
Opponents of the consumer safeguards in payday lending say they will cost Ohio jobs just as the state is beginning to rebound from recession. Some urban Democrats argue the reforms would hurt their constituents who would have nowhere to get credit if payday lenders went out of business.
The intent of the reforms, however, is not to shutter all of the corner-store, fast-cash businesses. Clearly there is a need for quick short-term loan services, or payday lending would not have mushroomed into a growth industry in the state and the nation. The intent is to protect consumers — many of whom are in dire financial straits — from financial exploitation.
As we approach the second anniversary of passage of the original payday lending law in Ohio, we would implore Republican state Sen. Steve Buehrer, chairman of the Senate Insurance, Commerce & Labor Committee, to schedule hearings on the bill so that it has a fighting chance of making it into law by year’s end. Only then will the wishes of the General Assembly and of the majority of Ohio voters finally be granted.
Comments
Everyone demanded payday lenders change their practices in 2008. When they did, everyone called it a loophole and more editiorials are demanding more action.
"Clearly there is a need for quick short-term loan services, or payday lending would not have mushroomed into a growth industry in the state and the nation."
If there is a need, then let payday lenders operate and stop being so anti-business.
My company doesn't issue borrowers a check, we make cash advances.
Most companies also do not charge credit check fees because they do not check credit.We also don't charge origination fees or broker fees and force borrowers to undergo financial counseling.
My company charges $15 for every $100 borrowed for two weeks.
The only way to achieve the "sky-high" interest rates you mention is for someone to roll-over a loan every two weeks for an entire year.
State law prohibits unlimited roll-overs and my company only allows four rollovers for a loan. We also offer an extended payment plan for no additional interest or fee if a borrower gets in over his head.
Please check out businesses you criticize before issuing such blanket statements that mark all payday lenders as "shameless."
I am sick and tired of the vindicator bashing the payday loan business i have yet to read a article that knew what they were talking about.People need this industry like it or not if not don't use it.The voters were misinformed because of the media printing the industry charging 395% interest. Come on anyone with any sense can figure out that this information is wrong;fact is you borrow $300 you pay back around $347 thats it no hidden fees.This bill will put over 3,000 people out of a job.Printing these articles is shameless!
The fact is that . . ..
http://i33.tinypic.com/353cppz.jpg
Good grief. The house takes most of a year to debate a bill. Now you just want the senate to rubber stamp it? Why have a senate if that's your opinion?
This bill takes away credit. This leads to increased evictions, foreclosures, etc.
This bill takes away jobs, which isn't exactly good for Ohio or its tax base.
Just as importantly, the bill sends a message to anyone who wants to open a business in Ohio: we may let you pay for a license to operate according to our rules, but following the rules isn't going to keep us from taking your license away - which means the life savings of the store owners too.
For consumers/workers/small busines people - this is a lose/lose/lose deal.
The only winner I can think of are the sleazes who use it to get their names in their home town papers in an election year.
Let's give the senate PLENTY of time to think it over.
Drug laws take away jobs, if only temporarily. When a job causes more harm than good to a society, then who cares if it's lost.
Payday lenders are legalized loan sharks, and nobody should feel sorry for them. If someone's mortgage payment depends on them heading to Check-n-to-cash, then they're going to be losing their home anyway.
Don't be fooled, the payday lending industry is willing to spend 10s of millions of dollars in lobbying efforts to keep their usurious practices in place, it's up to the people to stand up to them. I personally know PR people who are contracted by the industry to muddy the waters, and turn this into a "jobs" debate; even trying to make this into a capitalism vs. communism debate. They're each paid over 100K for their campaign, and they are good at what they do....even if it is deplorable.
Yes it's true . . ..
http://www.affil.org/uploads/JP/al/JP...
@300...Amen and well said. I get so sick of the "jobs" argument. They should never have gotten rid of the usury laws in Ohio and this industry would never have cropped up. The end does not justify the means. These places do far more harm than they do good. It's time for Americans to deal with their credit addiction. If you cannot afford a mortgage, car payment, large screen TV payment, etc. without going for a payday advance then you cannot afford those things. This industry takes advantage of poor, financially illiterate people.