In his latest rant against the payday lending industry in Ohio, Thomas Suddes argues payday lenders are operating through a loophole. The fact is, while dozens of lenders closed their doors upon passage of the annual rate cap in Ohio, other lenders, instead of laying off employees and turning customers away, began offering different credit products and services- all well within the Ohio lending laws.

In fact, during the legislative debate concerning payday lending, lenders were urged to apply for licenses to operate under Ohio’s Small Loan or Mortgage Loan Act and encouraged to come up with new credit products to service the growing consumer demand for short-term, small-dollar loans. This is exactly what lenders are doing- operating under the Small Loan or the Mortgage Loan Act, both which have been part of Ohio law for thirty years.

From a LTE in today’s paper:

The Plain Dealer’s editorial on short-term lending in the state misrepresented the facts (“Payday lenders keep right on fleecing Ohioans,” March 16). Currently, short-term lenders in Ohio are operating under the Small Loan Act, just as legislators requested last year. This law allows borrowers to receive loans of $500 or more at 28 percent APR with a one-time fee that can’t be rolled over or compounded.

Major banks such as Wells Fargo and Fifth Third have been offering loans under these same rules for years. Incredibly, interest groups are attacking only those organizations that previously offered payday loans. The group behind these attacks, the Center for Responsible Lending, is not responsible at all. This lobbying organization is funded by Herb and Marion Sandler, billionaire financiers who made their fortune offering the worst kinds of subprime, adjustable-rate mortgages.

During these tough economic times, credit is already hard enough to come by in Ohio. Further restriction of short-term loans would do nothing to reduce the financial need of individuals, and would only leave them struggling with another challenge to overcome.

From a letter to editor in today’s Cleveland Plain Dealer

Bank fees will have you longing for a payday loan

Posted by Raphael W. Hardman/Cleveland November 20, 2008 11:31AM

This latest editorial in the Plain Dealer oozes contempt for business, the Ohio State Senate, the lobbying process, and payday lending customers.   Ohioans are thought of by the rest of the country as being polite, common sense types.  The Plain Dealer editorial board members are obviously exceptions.  Their name calling, elitism, smugness, and vitriole is beyond the pale. 

A coalition of short-term credit lending businesses in Ohio have hired Former Soliciter General Theodore Olson to take a look at the constitutional implications of Ohio’s short-term lender law. This news release gives the details.

In the release, Mr. Olson said, “The legislation passed by Ohio’s House of Representatives seeks not just to regulate, but to destroy, an industry—the short-term lending business—that it explicitly authorized and encouraged just twelve years ago. That raises very serious constitutional questions. ”

Update: For the Plain Dealer’s take on the potential course of the payday fight see this vile piece.

A new poll by Zogby International finds that 84% of Ohioans think that credit decisions should be left to the individual while only 17% think the government should be involved.  From the news release:

Only one respondent – or 0.2% of the sample – said they think the state lawmakers should concentrate most on dealing with the payday loan industry – this despite widespread awareness of the effort now underway at the state capital to ban payday loans in Ohio. Nearly seven in 10 poll respondents – 68% – said they have heard something about that effort on at least a bi-weekly basis. Another 30% said they had never heard of the effort.

The telephone survey also shows wide support for the payday loan industry and for freedom for Ohioans in making decisions about their personal finances. A huge majority – 84% – said they believe the individual citizen 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 who have bank accounts that they cannot get a payday loan if, in their own opinion, people feel that payday loans are the best option for them.

Since the editorial board at the Cleveland Plain Dealer is so concernced about what Ohioans think, and the Zogby Poll provides definitive evidence of Ohioans’ thinking, the Payday Pundit expects an editorial from the paper urging legislators to leave credit decisions to individuals.  But, we won’t hold our breath.     

This silly editorial tells legislators to ban payday lenders because a poll done by a Left-wing union says people have a “negative view” of payday lenders. 

Of course, trust in the media, according to public opinion polls, is at 36%.   The Payday Pundit awaits an editorial in the Plain Dealer calling for the Ohio Legislature to ban journalism.  

The jobs of more than 6,000 Ohioans are on the line as the Ohio House passed a bill imposing a 28% annual rate cap on loans, essentially a $1.08 fee per $100 loaned.   Here is the Cleveland Plain Dealer story.  The bill now goes to the Senate where half the Senators are in support of a 36% rate cap.

This Cleveland Plain Dealer story has the latest, but payday lending lobbyist Darryl Dever sums it up nicely:

“If 36 percent puts you out of business, what do you think 28 percent is going to do?” asked Dever.

It’s amazing that given the rough time Ohio is having economically legislators would consider a bill that costs the state 6,000 jobs, millions in tax revenue, and uncountable losses to vendors, contractors and others that do business with the 1,600 payday loan stores in Ohio. 

Thanks to Lawrence Meyers for sharing this back and forth between himself and Thomas Suddes of the Cleveland Plain Dealer.

As is typically the case, editorial writers and columnists like Mr. Suddes have never used a payday loan, never been in a store, never spoken with a customer or an employee…yet still seem to know everything about the service, who uses it, and why.