From today’s Columbus Dispatch: 

 ”Our economy cannot afford to give up jobs like this industry provides when there was ample room to compromise to keep the industry going,” said Daniel Navin, the chamber’s{Chamber of Commerce} assistant vice president of tax and economic policy.

  “This bill, in my estimation, neither does anything positive for the consumer and certainly, by acclimation, does a great deal of harm to the paydaylending industry,” Sen. Bill Seitz, R-Cincinnati, told his colleagues.

 ”You can blame it on Bill Harris. He’s the one who made the decision in the caucus not to work with us,” said W. Allan Jones, CEO of Tennessee-based Check into Cash, which operates 92 stores in Ohio. “I guess up here, you all just need one guy.”

“Anyone who believes that the Small Loan Act is our savior knows nothing about finance and even less about what our customers want,” said James Frauenberg II, senior vice president of Dublin-based CheckSmart, which operates 105 stores in Ohio.

And while we’re at it, props to Jim Siegel at the Dispatch for providing the fairest, most balanced coverage of the Ohio payday lending fight over the last three weeks.  We’ve beaten up on a lot of Ohio reporters, so it’s only fair to praise the good ones. 

Today’s article  in the Columbus Dispatch speaks for itself.  The article quotes payday lending company executives as saying, “I’ve never seen anything like this.”

It’s a sad day when politicians play politics instead of listening the the people they represent.  They have ignored tens of thousands of emails, phone calls, letters and personal visits from the employees they will vote to put out of work and the customers whose credit options are being yanked away.  Come election time, let’s hope the good people of Ohio will turn their backs on those who turned their backs on them.

Saul W. Adelman, Associate professor of finance at Miami University  in Oxford, Ohio has this to say in a letter to the Columbus Dispatch.

Ohio House Bill 545, which is headed for debate in the Ohio Senate, should not be approved. This bill, which would cap the annual interest rate for payday loans at 28 percent, supposedly would help individuals who opt to use payday-loan services. This is a populist bill that ignores reality and would result in the opposite happening.

It turns out some of Ohio’s senate staffers are annoyed by the phone calls and emails coming in from their constituents.  

Quoting a Senate staffer, the Columbus Dispatach writes, ”Thank goodness for caller ID,” said one staffer before sending another call into voice-mail.

The Payday Pundit is aware of other Ohio Senate offices who have complained about the calls coming in to their offices.  Do they need to be reminded that they are government employees and beholden to the taxpayers and constituents they represent?  We need less complaining and more listening.

They are stacking the deck against the payday lending industry, but we’re fighting back.  This Columbus Dispatch story captures the latest:

House leaders said the bill is an effort to deal with the debt trap associated with payday loans: Many borrowers repeatedly take out new loans to pay off old ones.

The industry, which has grown from 106 stores in 1997 to more than 1,600 today, says the bill would put it out of business. Payday lenders are pushing back with:

• More lobbying.

• More phone calls.

Senate offices reported getting between 50 and 150 calls apiece last week from payday-lending employees who, reading from scripts, urged defeat of the bill. “Thank goodness for caller ID,” said one staffer before sending another call into voice-mail.

• More visibility.

In addition to packing the hearing room for proceedings that stretched into last night, about 2,500 payday-lending employees and supporters rallied Tuesday at the Statehouse.

This Columbus Dispatch piece lays it all out.

Columbus Dispatch estimates our crowd at 2,500:

An estimated 2,500 supporters of the payday-lending industry held a rally today at the Statehouse to urge the Ohio Senate to reject new  legislation to regulate the industry.

Read the whole thing here.

This Columbus Dispatch story has more information than the Cleveland Plain Dealer story below.  Key passage:

After months of debate over bills that were backed by either the payday industry or consumer advocates, the proposal that passed the House 69-26 is a victory for the Ohio Coalition for Responsible Lending, which pushed to lower the current 391-percent annual interest rate on two-week payday loans.

The group got a bill even more restrictive than it requested. It sought a maximum 36 percent interest rate and got 28 percent. The coalition wanted to limit borrowers to six loans per year, but the bill imposes an even tougher four-loan limit.

A victory for an advocacy group, but a defeat for consumers, and a defeat for more than 6,000 workers who will lose their jobs if this bill becomes law.  

This Columbus Dispatch story provides further details.  Key passage:

Stunning both the payday-lending industry and consumer advocates, House Financial Institutions Chairman Rep. Christopher R. Widener, R-Springfield, made major changes yesterday to a plan he introduced last week that did not lower the current 391 percent rate.

Widener introduced House Bill 545, which would cap payday lending rates at 28 percent, limit borrowers to four loans per year, cut the maximum loan size from $800 to $500 and require that borrowers get at least 31 days to pay off a loan.

Jamie Frauenberg, President of the Ohio Association of Financial Service Centers, minced no words this weekend in an opinion piece which appeared in the Columbus Dispatch.   This sort of clear thinking brings up precisely the points which critics can never seem to answer.

First, the loan is made for a two-week period, not 52 weeks. Why not calculate the interest based on the actual length of the loan? In this case, it would be 15 percent.

Second, using a payday loan to address unexpected financial shortfalls is far cheaper than alternatives, such as bouncing checks and overdraft-protection fees. Eliminating this product in no way affects demand; it simply drives consumers to more costly, possibly even illegal, alternatives. Other suggested options, such as borrowing from coworkers or family members, are simply not practical for many.

Third, delivering these products is relatively expensive because of the associated costs (labor costs, renting and maintaining storefronts, marketing expenses and bad debt, etc.). As a result, the industry average net income on a two-week loan with a $15 fee is $1.28. If the rate was capped at 36 percent, lenders would actually lose $11.37 for every $100 loaned, once the associated costs are subtracted. Obviously, the industry would be forced to stop offering payday loans if such a cap were implemented.