CFSA Press Release:

Consumers Denied Choice, Jobs Threatened as Ohio Senate Votes to Ban Payday Lending

Legislators Play Politics, Ignore Tens of Thousands of Ohioans 

Washington, D.C. – Ignoring the pleas of tens of thousands of customers and employees, Ohio Legislators chose instead to vote today to ban payday lending in Ohio, said the Community Financial Services Association of America.

Expressing outrage over today’s Senate vote, D. Lynn DeVault, CFSA president, said “There was absolutely no public clamor for this legislation. In fact, tens of thousands of payday lending employees and customers were ignored by legislators, who listened only to the editorial writers and elitist consumer groups.”

HB 545, which passed the House two weeks ago, places a 28% annual percentage rate cap on payday loans, reducing the allowable fees to less than 10 cents per day.  

“Operating under HB 545 is not economically feasible,” said DeVault. “Our member companies say they expect stores to close and jobs to be lost.”

DeVault said the Senate has asked lending companies to create a new business model that would allow them to continue making small-denomination, short-term loans available in Ohio. “Companies are doing their due diligence to see what options may be available under current law,” said DeVault, “But we are not hopeful. If companies are forced to operate under HB 545, they cannot. 

“Ohio’s Legislators do not understand the impact of what they have done,” says DeVault. “Our industry worked with lawmakers in good faith to forge a compromise that would protect consumers and preserve their access to credit.  We now appeal to Governor Strickland to do anything he can to lessen the human impact of this over-zealous action.”  

 Independent research has shown that without the option of payday lending, consumers bounced more checks, filed for more bankruptcies, did not pay bills and even choose such dangerous options such as forgoing prescription medications. 

A recent Zogby survey found 84% of likely voters in Ohio believe citizens should be free to make their own decisions about what kind of credit they can use, and 70% said the government should not be in the business of telling adults they cannot get a payday loan.

“Unfortunately, legislators did not listen to consumers surveyed in the poll, nor to employees begging for their jobs or customers asking where they would turn without payday loans,” said DeVault.   

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Senator Bill Seitz, before urging rejection to the payday lending ban, stated the bill was “not fair to consumers” and that the “economic impact of this legislation should not underestimated.”

Senator Bob Schuler stated, “I think we are going overboard now.”

UPDATE:  See who voted for and against

Read what those who voted for and against the ban had to say. 

Against the ban

For the ban

Sunday’s editorial in the New Hampshire Union Leader asks, “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?”

A few excerpts:

That’s from Tim Miller at the Center for Consumer Freedom in a piece in California’s Press Enterprise newspaper.  Also from the piece:

The rhetoric in favor of banning payday lending doesn’t seem to acknowledge the research vindicating the service, any more than it acknowledges the ability of adults to make debt-management decisions for themselves.

So says some smart and iconoclast characters at FITSNEWS, a new online news site in South Carolina, who are watching the payday lending debate.   (For laughs, click on the sites “about us” section.)   From the piece:

Since the mainstream media refuses to pick up on the blatant legislative shakedown that’s taking place with respect to the payday lending debate, we view it as our obligation to continue reminding people that the only reason South Carolina is even considering banning the industry is that a couple of rich, ethically-challenged legislator-shysters want to get even richer.

The New Hampshire house and senate have concurred. The effective date on the payday lending ban will remain January 1, 2009.

The Payday Pundit received this email tonight.

I have worked for a payday loan company for 5 years, and we are definitely a help to our community. Our customers are from varied walks of life: retired, some on social security income, unemployed, people who make over$50,000 a year, people who live paycheck to paycheck (who doesn’t?). There are some who depend on us regularly and some who come in just when something unexpected comes up. Our customers will be in a bad situation if we close our doors. They sign the contract and agree to their (usually 2 week, not a YEAR) FEE. Everything is upfront and they are aware of exactly what they are signing. They are not helped by their banks or have gotten in trouble with their banks and high interest credit cards. They don’t want to ask their families for help.

We need to charge the appropriate fee in order to pay for our labor, rent, utilities, etc. as any business does. We also provide many other services besides payday loans although this is our main service.

Payday lending is a service that is very needed, if not, why would there be so many of us and so many customers?

We also support many good causes such as the Susan G Koman Breast Cancer Foundation, Juvenile Diabetes Research Fund (JDRF) and currently the Big Brother/ Big Sister Foundation.

The governor, Ted Strickland, indicates his support for a 36 % rate cap in a letter to Ohio Coalition for Responsible Lending.  

If I could, I would ask the Governer to explain how taking a credit option away from consumers helps them.

The National Taxpayers Union has posted a copy of a letter they recently sent to members of Ohio’s House of Representatives.

The letter calls on Ohio lawmakers to “put their trust in the free market and the common sense of working people who understand that taking out a payday loan can be a sound financial option, often cheaper than a bounced check fee or a utility bill late charge. A punitive interest rate cap will not help consumers – it will make credit less accessible to Ohioans and cost taxpayers millions of dollars. A higher tax burden is something that NTU’s 13,600-plus Ohio members, and our 362,000 members throughout the country, actively oppose.