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. 

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 Bloggers Network conducted this online interview with the head of the Ohio Association of Financial Service Centers, Jamie Frauenberg.  Jamie, who is also a Sr. VP at CheckSmart, has been on the front lines these past weeks in the “battle of Ohio.”   From the interview:

If the Payday Loan industry disappears, where will people with no credit go?

Customers use payday loans to avoid other fees or less desirable alternatives. They choose between bouncing a check or overdraft protection, incurring late fees on routine bill payments, borrowing from friends, family or church, taking out a cash advance on a credit card, using an online lender or taking out a payday loan.  All of these products have a cost associated with them.

Eliminating payday loans just forces people to chose alternatives they had previously tried to avoid.

Recent studies have shown that without payday loans, customers bounce more checks, complain more about lenders and debt collectors, and file for Chapter 7 bankruptcy at a higher rate. One survey found some customers had utilities disconnected, went without a prescription medication or ended up with a damaged credit rating.

In each case, consumers may have been better served by payday advances, which often offer lower fees and do not negatively impact credit ratings.

Hour 2 features a lively intervew with Ohio’s Speaker of the House John Husted, a republican in support of banning payday lending.  Bob Franz has done his research, understands the industry and the product and does a great job asking the tough questions.  Husted admits that the 28% APR cap will close the industry down.  Quoting Franz, “With republicans like that, who needs democrats?”

Hour 3 includes more commentary on the payday lending debate with Jamie Frauenberg, president of the Ohio payday lending trade association.

In this Cincinnati Enquirer story, James Frauenberg of CheckSmart puts it in perspective:

“The profit margins in this industry are already thin,” said James Frauenberg, senior vice president of Dublin-based CheckSmart, during a meeting with the Enquirer’s editorial board. “I don’t see our landlords charging us less rent, the electric company charging us less for the lights and our employee health benefits are not going down.”

Also from the article:

Jamie Fulmer, a spokesman for Advance America, said payday lenders fill a void for tight households that need money for an unexpected expense.

“Banks used to offer customers a few hundred bucks to tide people over to the next paycheck, but they don’t do that anymore because they make more money in fee businesses,” he said.

The Payday Pundit will be posting more developments from Ohio later in the day.  

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.