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COLUMBUS - Ohio's top three political leaders announced today they will serve as honorary co-chairs of the campaign to defeat payday lenders' efforts to continue charging 391 percent interest on a typical two-week loan.
Democratic Gov. Ted Strickland joined with Senate President Bill Harris and House Speaker Jon Husted to praise Ohio's payday lending reform law and pledge vocal opposition to a ballot issue that seeks to erase Ohio's ban on lenders charging triple-digit interest rates.
"We did not ban payday lending. We reformed payday lending,'' Strickland told a Statehouse news conference. "We know the reforms are good for Ohio.''
Harris, an Ashland Republican, said the new law will protect Ohio's families.
"Many families are finding it difficult to make ends meet,'' Harris said. "Charging 391 percent interest rates and allowing for limitless repeat borrowing and constant debt, are no way to prop up a struggling Ohioan."
The reform law won overwhelming support from members of both parties, Harris said.
"In bipartisan fashion, Ohio passed one of the strongest consumer protection laws in the nation that caps interest rates and protects borrowers from getting trapped in a cycle of debt, all the while preserving access to reasonable short-term loans. I will be working hard in coming months to ensure these reforms remain on the books."
House Speaker Jon Husted, a suburban Dayton Republican, called payday loans "a defective product that undermines free market principles'' and contributes to our nation's problem with debt.
"With a national debt of more than $9.5 trillion, and consumer debt at an all-time high, it is clear that we as a country have serious borrowing and debt problems,'' Husted said. "Passage of this ballot issue will further exacerbate this cycle of debt that we can no longer afford.''
Joining the trio was Bill Faith, executive director of the Ohio Coalition on Homelessness and Housing in Ohio (COHHIO). Faith's organization helped lead efforts to pass one of the nation's best payday lending reform laws. It caps interest at 28 percent and limits to four the number of loans that customers can take out each year.
"When the lenders announced they would try and repeal all or part of our new law, we knew couldn't match the money they'll spend,'' Faith said. "We knew we wouldn't match the misinformation they'll peddle. But we're going to beat these people because we have the truth on our side - and the three most powerful elected officials in Ohio.''
Governor Vows To Fight For Payday Reform
If the Governor, Speaker and President of the Senate are together on this, perhaps payday lending is really a problem!
If the lenders really have millions to spend, how will we know which side is the consumer side?
Free Falln' in right: When these three gentlemen agree on something, it must be pretty good.
"They have removed consumer choice from this and in the process just destroyed 6,000 jobs," said Kim Norris, a payday loan industry spokeswoman. "Is this the time to take good-paying jobs away from Ohio?"
I have a few questions I would like the Plain Dealer to pose to Kim:
1. Since you are the people who want to bring back the 391% interest, but still let the 28% rate cap stand, do you really think that is a "choice"?
2. Are you guilty of making a false statement by continuing to insist that this new law will destroy 6000 jobs? The governor said his own cabinet agency has paperwork that shows about 1000 of these guys have filed for a new license to operate under different rules.
3. Good-paying jobs? Did April Fools come early?
I MUST have answers and have them soon!
You also made an April Fool's joke about the jobs not being good paying. Now I don't know what your standard is but from the people I know who work there are paid well and have benefits.
That makes no sense at all.
That is at the 391 APR%. If the APR is now 28% that reduces the amount of fees per customer per year to $51.56. How many customers do you think they have?
Remember the 28% is not on EVERY loan. It is annual percent. Because these are two week loans they are getting just over one percent per loan.
If they could make money at this percentage why have hey closed in all other states that have passed this rate cap?
Who would sign up for a loan at 391%, when they can easily get one at 28%?
If you believe it is an awful product and needs to be banned that's ok. I disagree with you but I respect your feelings on it, but atleast be honest that this law eliminates an industry and the jobs with it.
This seemed to be a little of both.
I can't help but wonder if you and the other people defending these loan sharks are being paid by them and are chiming in to blogs like this just to make it look like you have some support.
Even my conservative friends think this industry needs to shape up or close up. I have not found anybody who thinks this industry is worth keeping in the condition that it exists today.
When you have the top two REPUBLICANS in the State dumping on these guys and calling for reforms, that tells me a lot.
Here is the difference from the victims of crimes like assault or robbery. Those people don't want voluntarily get involved in those.
Now I see a lot of people saying they know people who were "deceived" or "tricked". Can anyone tell me how they were deceived? Every payday store I have seen has the dollar amount and the APR displayed on a large sign. State law mandates that the APR and dollar amount be printed in large boxes on the top half of the agreement. I get some people misuse these loans but to say they are tricked is not being honest.
I am curious why you didn't choose one of those places first? But given you are in this situation now, why not now go to a place that offers such a better rate, and get back on the right track?
Perhaps those others who have said there are plenty of places that will lend at 28% could offer some names / places for this person.
I hope you don't actually think any of these "ripped-off" customers will respond to your question of where they could get 28% short term loans now. That question would require facts and can not be answered by simply repeating clever little phrases like cycle of debt and predatory practices.
Link
Requirements:
1) Be a member. I don't know if there are any costs to join, but I expect there are some costs.
2) There's an annual fee to join this program (which amounts to $70 on a loan of $500 - that's the example they use.)
3) The APR is 18%
When you add it up, it exceeds 28% on that one-time loan.
Now compare that with the terrible, terrible "Predatory" lenders that charge, $15 on each 100 borrowed. Let's see, that would be $60 total. Or 12%.
I'm sure I rushed this and have missed a decimal place or forgot to "carry the one" or something else.
But it appears, that the payday lender that lends $500 and charges $60 is charging less than the "deal" I could get at the credit union.
In the example you provide the Credit Union charges 18% APR,
The Payday Lender 391% APR
Here's a link to an actual lending document from a payday lender for a $300 loan. . . it's called a Federal Truth In Lending Disclosure
Link
Notice the APR in bright red?
APR is the standard for expressing cost of credit and the payday lenders have to disclose it.