Ohio’s Coalition for Responsible Lending (“OCRL”) has issued a press release filled with deceptive information and fabrications. They should be held accountable and asked to back up their irresponsible claims with facts. It is important that people see through the hype surrounding the issue and consider the facts.

CRL Claims: A “compromise” is threatening the payday lending legislation and “outraging” advocates.

• The Truth: The industry has not put forward language for a compromise bill, but has talked to legislators that are interested in preserving some version of small loan choice for consumers and not putting thousands of people out of work. Our goal has always been to be part of a solution that addresses the concerns of policymakers and provides responsible protections for consumers. This type of scaremongering by OCRL underscores the fact that they do not want to help consumers. They refuse to support legislation that would actually help consumers by addressing issues such as cycle-of-debt. Their goal is not reform, it is an outright ban.

CRL Claims: The industry tapped into an almost never-used provision in Ohio Revised Code that allows credit unions to charge fees of $10 per $100 on top of the 18% APR allowed. Credit unions never took advantage of the provision because it was predatory.

• The Truth: This is misleading. Credit Unions asked for the provision in HB 81, sponsored by Geoff Smith and enacted in April 2006. In fact, the two credit union alternatives frequently referenced by the Bill Faith and OCRL charge more for a first time borrower than payday loan companies do.

For example:

The “Stretch Pay” payday loan alternative, offered by credit unions across Ohio and championed by OCRL and others as a better choice for consumers, comes with an 18% APR plus an annual fee of $35 (for a $100 advance) or $70 (for a $500 advance).

“Grace” Payday Loan offered by Faith Community United Credit Union- Cuyahoga County, OH is 17% APR plus a $15 application fee per loan.

CRL Claims: The industry wants borrowers to pay for industry’s taxes

• The Truth: Like any other product ot service, the costs associated with providing a payday loan dictates the pricing for consumers. Due to their not-for-profit status, credit unions are exempt from federal and state income taxes. And they do not have to pursue a profit. They are, therefore, able to offer payday loan alternatives at break-even or less. Credit Unions do not have the resources or the infrastructure to handle the loan volume after payday lenders leave. In order to continue offering payday loans in Ohio, for-profit payday lenders would need to not only break-even, but pay taxes and make a reasonable profit. The industry welcomes credit unions and any other financial service providers into this market. We believe consumers should have more choices, not fewer, and select the one that best suits their needs.

CRL Claims: First-time emergency borrowers would pay 469% APR…Currently, payday lenders charge $15 per $100, or 391% APR.

• The Truth: The numbers don’t add up. The fee per $100 will go down from $15 to $10.00, the truth is that the only additional fees discussed were for tax liability obligations, but CRL claims the APR will go up from 391% to 469%. This is blatantly false.

The winner is Carolyn L. Dessin, a law professor at Akron School of Law.  In a column today on the Cincinnati Enquirer  she essentially repeats every half-baked opinion of the Center for Responsible Lending.  

Here are just a few of the  ”facts” that make Professor Dessin the “winner.”  Payday Pundit’s points are in CAPS. 

She says: “The people who seek payday loans are generally in extremely bad financial shape.”  THERE IS NO EVIDENCE OF THIS.  PLEASE CITE A STUDY, PROFESSOR.

She says: “No responsible lender would lend to many of these borrowers.”   WHAT? ALL PAYDAY CUSTOMERS ARE BANKED, MOST HAVE CREDIT CARDS, A LARGE PERCENTAGE HAVE MORTGAGES.  

She says:  “The Center for Responsible Lending notes that minority and female borrowers take out a disproportionately high number of payday loans, as do members of the military.”     MEMBERS OF THE MILITARY DO NOT HAVE ACCESS TO PAYDAY LOANS.  AS FOR WOMEN AND MINORITIES, THE PROFESSOR SEEMS TO BE IMPLYING THAT THEY ARE NOT CAPABLE OF MAKING GOOD FINANICAL CHOICES.   CLASSIC ELITIST CONDESCENSION. 

Professor Dessin, you need to learn to think for yourself, not take talking points from the Center for Responsible Lending.  

 

This time in the Houston Chronicle.  Reporter Carolyn Feibel begins her story:

They hide cash in their homes, dodge robbers who lurk about check-cashing stores, and shell out millions in fees to payday lenders and pawnshops. They are the “un-banked” of Houston, and there are tens of thousands of them.

Like many reporters, Ms. Feibel doesn’t understand the distinction between check cashing customers and payday loan customers.  ALL PAYDAY LENDING CUSTOMERS ARE BANKED! 

Sorry for screaming, but it is unteneble that reporters who are supposed to know the rudimentary facts of the subjects they cover keep making this mistake.   It’s not rocket science.  Checking cashing is for the unbanked; payday loans are for people who have checking accounts.