About the Payday Pundit
Payday Pundit is the blog of the Community Financial Services Association of America, the national trade association of payday lenders.
CFSA is the only national organization dedicated solely to promoting responsible regulation of the payday advance industry and consumer protections through CFSA’s Best Practices. As such, we are committed to working with policymakers, consumer advocates and CFSA member companies to ensure that the payday advance is a safe and viable credit option for consumers.
We welcome consumers, reporters, policymakers and even our critics to the Payday Pundit and hope you visit often!
If you have something for us to post, please send it to paydaypundit at yahoo dot com.
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Not sure you have seen this, but banklawyer’s blog (www.banklawyersblog.com) made some pretty hostile comments about payday lending again. Although normally his comments are for the free market, whenever payday comes up as a topic, he is very critical of the industry. You may want to post some reply, as he does not appear to be posting comments favorable to the industry, despite efforts at commenting. Here is a link:
This is different, but he makes some good points
http://www.wanderingheretic.com/2008/04/28/mash-4077-and-mess-hb-333/
The Ohio Chamber of Commerce is opposed to HB 545
http://www.ohiochamber.com/governmental/pdfs/payday%20lending.pdf
this is good
http://www.peoplesdefender.com/main.asp?SectionID=3&SubSectionID=3&ArticleID=126921&TM=39294.97
another good article
http://www.newarkadvocate.com/apps/pbcs.dll/article?AID=2008805080347
Just wanted to let you know I have taken the first step to help consumers in Ohio in the event House bill 545 passes the senate.
I have asked for help from Bill Faith and the Coalition for Responsible Lending to help cover expenses (losses) for my non profit organization that will be offering this new loan product. I expect to lose between 200,000 and 400,000 the first year. If his coalition is willing to help sponser /cover this, we will be on our way. We currently exist as a profitable one store payday loan location in Columbus, Ohio.
Will let you know what happens, so far I am waiting on a return call.
Tom
Finally someone tells it like it is.
http://www.unionleader.com/article.aspx?headline=You‘re+fired!+Gov.+Lynch+issues+pink+slips&articleId=a0f5263a-987f-4c98-a578-139e2a8edc1a
You’re fired! Gov. Lynch issues pink slips
Friday, May. 9, 2008
WHEN THE Wausau Paper Mill in Groveton shut down last fall, a closing credited to global competition, Gov. John Lynch rushed to get the 303 employees federal and state aid as quickly as possible. Now, what, if anything, is the governor going to do for the 200 private-sector workers he personally will make jobless at the start of next year?
Last week legislators essentially outlawed payday lending and title lending in New Hampshire. The industry employs roughly 200 people in the state. All of them will be out of work by Jan. 1. That’s when House Bill 267 takes effect. Gov. Lynch, who ought to know better, has said he will sign the bill.
The bill caps interest on short-term loans at 36 percent. Legislators and Gov. Lynch have determined, by some mysterious standard, that any interest rate up to 36 percent is fair, and any over that rate is so horribly unfair that it must be outlawed. Payday lenders cannot make a profit if their rates are capped at 36 percent. They will shut their doors on Jan. 1, 2009, when the new law takes effect.
You might think of your own credit cards and say to yourself, “Why, 36 percent is outrageous!” But payday and title loans don’t work like your credit cards. The period of these loans is typically two weeks. To make such loans work, lenders charge high fees. But borrowers are not paying thousands of dollars in interest. Most payday loans are closer to $200, which costs the borrower about $40.
The question we have for Gov. Lynch is this. How does he determine which New Hampshire employees he will help stay employed and which he will put out of work?
The 200 employees in the payday and title loan industry will have to find new jobs because they are unlucky enough to work in a field the governor doesn’t approve of. The state has eliminated their jobs, and tough luck to them.
Mill workers, on the other hand, are valued by politicians. We often see photos of politicians standing proudly in front of old industrial plants shaking the hands of workers who will receive government assistance.
Such North Country aid is justified. But why no aid for people made unemployed by government fiat?
When it comes to making decisions about people’s livelihoods, Gov. Lynch has a history of picking winners and losers based on purely political calculations.
Run a bar that caters to smokers? You must be stopped! Sell wine? We’re going to raise your wholesale prices! Sell cigarettes? We’re going to tax them until your sales drop! Charge people $20 for a $100 loan? Be gone from the state!
Turn trees into paper? We’re here to help! Work in the North Country? We’re going to give you a tax credit!
Maybe one day Gov. Play-It-Safe will stand up in Concord for the owners and employees of some politically incorrect industry — gun dealers, maybe — and show that he’s genuinely concerned about protecting all jobs, not just his own. But realistically, we cannot see that happening.
(Quote)
tom // May 9, 2008 at 9:22 am
Just wanted to let you know I have taken the first step to help consumers in Ohio in the event House bill 545 passes the senate.
I have asked for help from Bill Faith and the Coalition for Responsible Lending to help cover expenses (losses) for my non profit organization that will be offering this new loan product. I expect to lose between 200,000 and 400,000 the first year. If his coalition is willing to help sponser /cover this, we will be on our way. We currently exist as a profitable one store payday loan location in Columbus, Ohio.
Will let you know what happens, so far I am waiting on a return call.
Tom
(Quote end)
Tom, you are sayingyou can take care of all the people who need short term cash instead of all the 1600 ppayday loan stores? And you propose to lose $400,000 first year? Wow who would be sponsoring you at such a loss, unless they have some future profit coming back to them? So you are making it rather clear that Bill Faith and the Coalition for Responsible Lending is one who will benefit from passing this bill?
I have nothing further to say.
Dr. Tom Lehman posted an article about payday lending legislation.
http://www.buckeyeinstitute.org/article/1128
And exposed how research done by Ohio Colition for Reponsible Lending was a biased one put together an agenda.
Yeah it is about time to expose some helter skelter researchers (and their reasearch) who write up bogus research.
Goverment in action in New Hampshire and Ohio
“No man’s freedom or property are safe while the legislature is in session”
The following letter was published in the Manchester, New Hampshire Unoin Leader on July 9th
Gov. John Lynch
closed my business
To the Editors: My name is David Martin. I own Colortyme Payday loans in Manchester. My partner and I are both longtime full time residents of New Hampshire. Our business is incorporated in New Hampshire and we are licensed by the state Banking Department.
Yesterday, Gov. John Lynch signed HB 267, eliminating payday loans in New Hampshire. I will be forced to close my business.
My costumers are hard working honest people who at this point in their lives are living paycheck to paycheck. They need these loans when they face unexpected financial emergencies. They are shocked when I tell them we are closing.
The first question they ask is ” Why are you closing? ” My answer is “Because the State has decided that you don’t deserve access to short term credit.” The second question they ask is “What am I going to do now?” The only answer I can give them is ” I honestly don’t know.”
David Martin
http://www.concordmonitor.com/apps/pbcs.dll/article?AID=/20080716/OPINION/807160369/1029/OPINION03
This letter is in response to: A reasonable law on payday loans
Perhaps Mr. Gladstone would have a better understanding of this issue if he read this study done by his own foundation: Low Cost Payday Loans: Opportunities and Obstacles
Here are some highlights:
Though depository institutions have the means to offer low-cost payday loan alternatives,
the proliferation of fee-based bounce protection programs represents a significant impediment
to competition. Some depository institutions are already offering high-cost payday
loan alternatives in the form of fee-based bounce protection. Under these programs, banks
and credit unions offer to cover customers’ overdrafts for fees ranging from $17 to $35
per overdraft. Though they are not identified and marketed as payday loan alternatives,
fee-based bounce protection programs are functionally equivalent to payday loans when
used by customers as a form of credit. When used on a recurring basis for small amounts,
the annualized percentage rate for fee-based bounce protection far exceeds the APRs
associated with payday loans. Banks and credit unions benefiting from overdraft fee
income may not want to cannibalize this income by offering their customers lower-cost,
small dollar credit options.
Why the explosive growth in payday lending? Ironically, payday industry officials point
to banks themselves. They assert that payday loans look relatively cheap to their cashstrapped
customers compared to high NSF fees, which accompany bounced checks, retail
service charges for returned checks, and/or late fees associated with missed rent or utility
payments. A payday loan can help customers avoid these costs, as well as avoid damage
to their credit scores from NSF transactions. They contrast the $40 billion in payday loans
last year with studies showing $22 billion collected from consumers in NSF fees in 2003,
and another $57 billion in late fees.6
Interviews and industry survey data indicate that payday loan customers do make a cost
analysis in comparing the price of a payday loan with the alternative costs of bouncing a
check and/or incurring late fees. For instance, 73 percent of respondents in the industry’s
2004 customer survey55 ranked avoiding late charges on bills as a personal benefit of the
payday advance; 66 percent ranked avoiding bounced checks as a benefit. Advance
America views its ability to price its product attractively as compared to bank NSF charges
as key to its future profitability. Price may not be an exclusive, or even dominant, determinant
in customers’ decisions to use payday loans. However, it is clearly a factor.
A more substantial impediment to banks and credit unions entering this market is the
proliferation of fee-based bounce protection. In a sense, fee-based bounce protection is a
“payday loan alternative” whose costs, if used as credit, can far exceed that of a payday
loan. Many banks and credit unions will not view it as in their interests to offer lower-cost,
small dollar credit options such as LOCs and closed-end installment loans, if they can
reap much higher, per transaction fee income from bounce protection. Competition could
be facilitated if regulators required homogenous APR disclosures for all small dollar credit
products. This would empower consumers to identify the lower-cost products and enhance
the competitive position of institutions that are foregoing the hefty revenues associated
with fee-based overdraft protection in favor of those lower-cost options.
David Martin
There is a lot of good information on paydaypundit.org. I also have a daily blog about the payday loan industry at:
http://pdlindustry.blogspot.com/
I would like to get some feedback on my blog from other industry people.
This is a good letter
Reader’s View
Published:
Thursday, September 11, 2008 9:34 PM CDT
Choice: Ours to make on payday lending
Dear Editor:
Financial freedom — what does it mean to you? What is it worth? I believe we should have the right to make our own financial choices without having the government looking over our shoulders. I believe if I or someone I know feels like a payday loan is the best decision for them, that’s all that matters. It’s up to us, we are free citizens, and we have free will, and the government isn’t here to look after us and treat us like children.
Our politicians don’t seem to think this way, because they passed a law aimed at putting payday lenders out of business. They did this even though the terms of payday loans are clearly agreed to by both the borrower and the lender, and it’s a completely legal activity. That’s why dozens of other states across the country also have payday lending in their state. It’s an option that is attractive to many people. It’s attractive not because these people are ignorant, but because it genuinely is a good deal for them. $15 to borrow $100 seems fair to me.
I’m disturbed by this power grab from our state legislators. I’m voting NO on Issue 5 to make sure they get stopped in their tracks.
Katrinka Perdue
Pomeroy
great editoral
http://www.unionleader.com/article.aspx?headline=Payday+delay%3f+Tough+luck%2c+buddy&articleId=ac8bf44f-9c89-4d18-8116-643bbc083f51
LA times story in today’s Boston Globe
THIS IS NOT GOOD
http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/02-27-2009/0004980021&EDATE=
Can you publish links to the FDIC small dollar program results? I’d like to see a bit more detail, and I would also like to see what the FDIC has spent so far per loan on those 8,346 loans!
Thank You
I just wanted to say “thank you” to the Payday Pundit for being one of the few sites today which stays currently updated with great articles and keeps us in the industry current with changes to state legislation.
Our industry is constantly being slandered with mis-guided statistics and mis-truths about our customers and our practices. In a sea of outdated information it’s refreshing to have ONE site to check daily with current and honest info. Thank you!
customers love it.