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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2010 > April > 26 > Entry
Editorial: Payday lenders think they can ignore you
Ohio should be done with payday-lending scams.
Two years ago, lawmakers passed a law capping short-term loan rates at an annual percentage rate of 28 percent.
In November of that year, voters were asked whether they wanted to keep the new law. An overwhelming 64 percent said yes.
End of discussion, right? Wrong.
Within days, the payday people were back, setting up under different laws that were never intended to regulate their brand of lending. They zeroed in on loopholes.
One of them allows payday lenders to call themselves a “credit service organization,” which, in theory, is an outfit that helps people figure out how to get out of debt.
The payday lenders’ recommendations? Take out a ridiculously high-cost payday loan. How cynical is that?
The decision in Ohio to regulate this industry is not a fight between liberals and conservatives. Ohio’s law was passed by a Republican-controlled legislature that was decidedly business-friendly. After hearing both critics of payday lenders and industry representatives, Republicans concluded that the industry is peddling a destructive product.
Unsophisticated, low-income borrowers are coached into borrowing one loan after another, not grasping that every time they sign their name, they are paying more high-cost fees. Customers living paycheck to paycheck aren’t just delaying paying off debt; they’re spending money they don’t have.
Consumers have an obligation to know what they’re getting themselves into. But government also has an obligation to step in when it sees desperate people getting hosed. After all, if customers end up in the poor house, they’ll then be turning to the government for help.
For more than a year, critics of the payday industry have asked lawmakers to enforce the will of the people, to fight back against people who have mocked legislators’ decision to regulate them.
With just a few days left in the legislative session before the summer break, there’s a push on to pass a proposal that would do three things:
— Prohibit payday lenders from charging fees to cash the checks they sell to their customers. (Since they’re writing them, they know the money is there and that the check is not going to bounce; this is just another way to get around interest caps.)
— Limit origination fees and credit checks for loans of less than $1,000 to once every 90 days. (Currently, some lenders charge these fees as often as every two weeks, when borrowers pay one loan back and need another because there’s nothing left of their paycheck once they’ve paid back the previous loan.)
— Prohibit “brokering” of loans at the 28 percent cap, and then charging a fee for the service that can raise the real costs of the loan amount to as much as an annualized interest rate of 670 percent.
There’s no question that there are very many people who, now and again, need cash quickly to avoid costly overdraft charges, credit card late fees or cut-offs of their utilities. There should be a place for these people to turn in an emergency.
But these people are not really being helped if the assistance they’re getting locks them into loans that will eventually bring financial collapse.
When that happens, it’s the borrowers’ legitimate lenders and creditors who will get stiffed. The payday people will have been getting their fees and interest at every step along the way.
The Ohio House could — and should — vote on consumer protections as early as next week. Dayton’s delegation — state Reps. Terry Blair, Peggy Lehner, Clayton Luckie, Seth Morgan, Jarrod Martin and Richard Adams — needs to do what voters clearly thought they already did: rein in the payday people.
Permalink | Comments (16) | Post your comment | Categories: Editorials, Ellen Belcher, Ohio government, Ohio politics
Comments
By Leon Harrison
April 26, 2010 4:58 PM | Link to this
So what? The feeling is mutual. Boohoo, I can and do ignore them too.
By Kurt
April 26, 2010 6:53 PM | Link to this
Just yet another example of democrats creating a victim voting base. You must have big daddy gov. taking care of you, because you are too stupid to do it yourself.
By J
April 27, 2010 8:54 AM | Link to this
Since when is every business, every type of business, worthwhile? If a businessman says it’s ‘good’, does that make it ‘good’? Since when did profit dictate morality and ethics? Maybe that’s the right view. I’m gonna start making bio and chemical weapons, ignora any safety regs. Why? Because there’s a lot of profit in it and safety regs get in the way of profit.
By Ice Bandit
April 27, 2010 9:21 AM | Link to this
Suppose your car’s alternator takes a Tuesday siesta and you gotta’ get to work. The bank doesn’t want to deal with a sub $200 loan and your friends are tapped. What’s wrong with an adult entering a temporary agreement with a company that will front someone the repair bucks? Marty and Ellen get burqas in a bundle over some of the dumbest reasons…
By Ice Bandit
April 27, 2010 9:28 AM | Link to this
Hey Marty and Ellen. The payday loan people aren’t the only ones ignoring government dictates. The bar smokers voters thought they were gonna’ regulate are openly lighting up and enjoying it. The barkeeps, having watched other watering holes dry up and die due to the smoking ban, know that when it comes to the law, it’s defy or die. And the state is making back door admissions they can’t enforce these nanny-influenced and DDN endorsed rules. Viva la revolucion…
By Davidss2
April 27, 2010 9:58 AM | Link to this
Ice Bandit: it’s the manner and amount of charging by the Payday loan sharks that is the problem. Oddly Martin and Ellen only care about Payday rates occasionally. They could have been continually hitting it rather than pimping for their democrat friends and trying to help push through the tax increase healthcare legislation. But they’d rather drop at an article when it’s too late, so they can say, “Told you what you should be doing.”
By joe_mamma
April 27, 2010 10:42 AM | Link to this
Wow. This piece really offers a lot of scary insight into the liberal busy-body big government mindset. Who better to “protect” the citizenry from their own personal financial decisions than those who have shown they have ZERO responsibility or credibility when it comes to the government finances?
By Ice Bandit
April 27, 2010 10:57 AM | Link to this
Davidss2. What problem? Adults engaging in voluntary business agreements for rates the same as credit cards without Big Bro’s approval. Sorry, see no problem. And joe_mama, yours is post of the month club blue ribbon winner. Wish the Old Bandito had thought of that…
By Ray
April 27, 2010 11:22 AM | Link to this
Who is holding a gun to their heads and forcing these poor people into the payday lending shops? Inquiring minds want to know.
By Alice
April 27, 2010 11:56 AM | Link to this
Ray, Joe, Ice… they are a perfect example of what’s wrong in this country and our selfish society. All talk about individual responsibility but no understanding of shared responsibility. There’s a lot of talk these days about individual liberty but they seem to have forgotten the sacrifices that our forebears made for each other. We wouldn’t have a country if our parents and grandparents had only thought about themselves. And this is what is really irresponsible of the politicians and the talking heads that push this - they care only about ratings or the next election and they don’t care if the country is torn apart in the process. It’s as if Ray Joe Ice et al… had never heard of regulation before Obama’s election! I’d hate to think of what desperate situations these ignorant folks would have gotten themselves into if they hadn’t had any consumer protection laws protecting them!
By joe_mamma
April 27, 2010 12:42 PM | Link to this
Alice…I hate to burst your bubble, but a lot of times an individual’s responsibility lines up with other people’s responsibility. That’s why we as a nation are able to have an all volunteer army and a quantity of charities that are too numerous and generous to even count. You can try to paint me as selfish if you must. But I am not the one advocating using the force of the government to prevent people from doing something. I would argue that you are the one that is selfish. No man has a natural right to commit aggression on the equal rights of another, and this is all from which the laws ought to restrain him. - Thomas Jefferson A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned — this is the sum of good government. - Thomas Jefferson If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; and may posterity forget that ye were our countrymen. - Samuel Adams They who would give up an essential liberty for temporary security, deserve neither liberty or security - Benjamin Franklin
By Ice Bandit
April 27, 2010 4:47 PM | Link to this
Hey Alice. Silly me. The Old Bandito thought our ancestors fought and sacrificed so hombres like me would have the freedom to master our own destinies. Which includes making bad decisions. And as a historical sidebar, Alice, if getting into desperate situations was an Olympic event, the Old Bandito would be wearing a gold medal. But there is nothing fatal about gettin’ out of the hole by hard work, saving some money and discarding some bad habits, which in the Old Bandito’s case, was a $20 a day bar habit when two fins was worth a lot more than it is now. It’s called, Dear Alice, the learning curve…
By Lea
April 28, 2010 9:04 AM | Link to this
I have been in some tight spots financially. I have made sure my kids ate when I did not. I have NOT ONCE been to a payday lender. This is a personal choice. If these people choose to mmake bad decisions, why should I have to bail them out?
By MIke
April 28, 2010 12:21 PM | Link to this
I have occasionally used a payday lender in the past. Only borrowing $100-$200. I don’t mind ONE BIT paying back $115. or $230. It’s not hurting me but, outlawing these places CERTAINLY WILL! Mind your own business! If people are STUPID enough to get caught in a vicious cycle; SO BE IT! It’s called LEARNING. Stupid people…
By ironmyke
April 28, 2010 2:45 PM | Link to this
The Pay-day lending folks subscribe to the PT Barnum school of business where “There’s a sucker born every minute.” Some people who have been able to stay out of this trap feel superior to and are very critical of those who for whatever reason get caught in it. Blaming the victim lives on.
By fortressdayton
May 3, 2010 9:41 AM | Link to this
My only complaint with Payday lenders is that they can charge interest that i am prohibited from charging as a private lender. If i sue someone in court for 28% interest on a personal loan of $100.00, the judge will dismiss because the fee is USURIOUS. How’s that for loophole??? If I could loan @28% I would stop working and start feeding off all these ‘poor’ people.