Payday lenders in Ohio are facing a bleak future.  Tax paying businesses shuttered, leases broken, employees laid off.  It’s scary how quickly the government can take one’s livelyhood away.

The Phoenix Business Journal reports that “200isNoReform.com” is now “Arizonians for Responsible Lending,” yet another branch of the Center for Responsible Lending and is working to strip Arizonians of their financial choices by capping payday lending at a 36% annual interest rate. The Payday Pundit has said it once and will probably have to say it a million times…payday loans are not annual loans, they are not mortgages, they are short term, low dollar loans. Applying an annual interest rate to them is akin to trying to rent a car for a weekend and the agent telling you how much it would be to buy the car. It makes absolutely no sense.

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.  

With  songs such as “Freedom” and “Save our Jobs” chants in the background, reporter Bill Cohen reports on the “massive rally” earlier this week with the “folks who own and work at the stores who came from across Ohio.”

With soundbites from D. Lynn DeVault (CFSA president), Jamie Frauenberg (Checksmart Sr VP), Karen Findlay (Advance America employee), Senators Bob Schuler and Joy Padgett as well as those who want to ban the industry, Cohen presents a balanced piece on the  debate in Ohio.  Thanks to Cohen for taking the time to attend the rally and speak to those most impacted by the proposed ban. Journalism as it should be.

The Ohio House of Representatives has passed a bill that would ban payday lending in Ohio. The Senate will debate the bill next week.

Why should you care? If this bill passes, payday lenders will close their doors in Ohio. Even if you’ve never used a payday loan and don’t plan to, do you think the government should be eliminating credit options? The hard reality is that employed, hard working Ohioans sometimes fall short of cash between paydays. Why should the government make their credit decisions for them?

And what about the 6,000 Ohioans who will lose their jobs? What will happen to them?

The elimination of more than 6,000 jobs and a regulated short-term credit option are at stake.

• 6,000 jobs with benefits, such as healthcare and retirement, will be lost
• 1,600 payday lending stores would close
• If the industry is banned, the ripple effect will be felt by vendors, suppliers, local businesspeople and the Ohio tax coffers.
• A regulated short-term credit option would be yanked away from Ohio’s consumers, leaving them to choose between less desirable, more costly alternatives.

Click here to write your Senator and tell him/her to protect Ohio jobs and don’t eliminate a short-term credit option.

This could be a record.  The Payday Pundit is posting TWO fair and balanced stories in a row.  This one out of the Morning News in Northwest Arkansas carries the amazing headline: “Banning Payday Lending May Hurt Some.”   No kidding.

And the reporter, John Henley Jr. actually talked a customer and described his situation:

He has worked for the same company for 14 years and has a checking account, but a two-year dispute with his insurance company ruined his credit and payday loans kept food on his family’s table through February and March.

Kudos to Mr. Henley and the Morning News for looking at the customer perspective and publishing a fair story.

Thanks to Dave for sending the following to Payday Pundit…

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New Hampshire is on the verge of banning payday loans. I own a payday loan office in Manchester, NH. The following is a letter one of my employees wrote to address this injustice.

Guest Shot: Appalled at Legislatures effort on payday lending

February 22, 2008 6:00 AM

I am a payday loan officer in Manchester. I have been very active with the current bill (HB 267) that has gone through both the House and the Senate.

This bill will eliminate payday loans in the state of New Hampshire by imposing a 36 percent APR cap. Thirty-six percent would mean for every $100 loan, we would make $1.36, this is not enough to pay normal maintenance for a company. I am appalled at the behavior of both the senators and House members in regard to these bills. It is my belief that instead of working in the interest of their constituents, they are working in the interest of the banks.

…In the past four years, the welfare department of New Hampshire has seen a drop in the number of people requesting assistance. Oddly enough these numbers coincide with when payday loans first started to emerge in the state. Instead of New Hampshire residents asking for government assistance, they are trying to make ends meet on their own.

…At the New Hampshire Senate hearing which was held on Feb. 14, Sen. Bargdon of Milford, admitted to having a limited knowledge of how payday loans work. Instead of voting with a lack of knowledge about the subject, he actually visited a payday loan office. He spoke to customers and loan officers. After getting an idea of what it is we do, he voted against HB 267 to eliminate payday loans, deeming payday loans to be a valuable service. Perhaps the vote would have gone differently had more senators took the initiative to visit or even call a payday loan office.

…HB 267 has left a number of people without an option and currently it appears that the only ones benefiting from its passage are the banks. The banks who will be making $30-$40 per overdraft fee. As stated earlier, these fees equated more than $30 million in one state, and that was within one year. It now seems as though the senators have lost the interest of the people and replaced it with an interest for the banking institutions. My concern is no longer for myself and the 200 other employees out of a job in the state of New Hampshire. My concern is where are our customers supposed to go?

Well said Ms. Simms.

Nice to see a consumer blogger playing it straight.  This Seattle Post Intelligencer blogger picks up Check into Cash’s announcement with no commentary.   It’s also picked up by BizJournals.   Maybe politicians will get the message that a 36% rate cap IS A BAN. 

The National Center for Policy Analysis has a short article on the high costs of bounced check fees and the negative impact of payday loan bans.

Read “Bad Bounce”

The Payday Pundit woke up to a nice editorial in the Rocky Mountain News , Payday Loan Overkill, urging the legislature to oppose restrictive legislation that could put the industry out of business in the state.  The money quote:

“As we said in November, for some residents who don’t have access to other forms of credit, or ready access to cash, payday loans can be the least expensive option when money gets tight. Late fees or bad-check charges can exceed the transaction costs of a payday loan. Repeatedly missing bill payments can mean the end of check-writing privileges and further damage credit scores.”