Payday Pundit

These guest editorials–obviously organized by payday lending opponents–whining about the signature gathering process of the Ohio referendum are getting old.   This line of argument is being pushed because the anti-payday lending forces don’t want to argue about “consumer choice.”  It’s an argument they can’t win.   

But, as the so-called “paper of record” it’s nice to see the New York Times is on top of things.  From today’s piece that sums up all the activity in Ohio and Arizona:

Ohio lawmakers sought last spring to aid borrowers like Ms. Minda {a payday loan customer} by capping annual interest rates for payday lenders at 28 percent, a sharp reduction from 391 percent. But lenders are fighting back in a novel way, collecting enough signatures, once certified, to force a vote in November on a ballot measure that could overturn legislation that established the rate cap.

“You can’t make a payday loan cheaper than the industry does,” said Steven Schlein, a spokesman for the Washington-based Community Financial Services Association of America, which represents lenders.

Mr. Schlein said lenders had left other states that had recently capped rates at 36 percent or lower. “Consumer choice has always worked best,” he said. “That’s what drives prices down, not eliminating competition.”

The Payday Pundit thinks the always brilliant Steven Schlein has it dead right.

The Minnesota Department of Commerce has issued new rules.  From the article:

Out-of-state lenders who provide short-term consumer loans against workers’ next paychecks will be subject to Minnesota law and licensing requirements, the Minnesota Department of Commerce ruled Friday.

Kevin Murphy, a deputy commissioner in charge of state-licensed financial institutions, said the volume of so-called payday loans has “exploded” on the Internet and the state has started to get consumer complaints about fees and unresponsiveness of out-of-state lenders to their questions.

“We’ve had a small number of complaints from Minnesota consumers about Internet-based payday lenders,” Murphy said. “We’ve had very few complaints about payday lenders who have a physical presence here.”

Did you get that: “Very few complaints about payday lenders who have a physical presence here.”  That could be said about almost every state.   That’s why it’s so foolish to impose rates caps, cripple storefront payday lenders, and force consumers into risky Internet loans.

I wish these so-called consumer groups (and the government) would keep their noses out of the lending business. What ever happened to the free market.

The Community Financial Services Association of America has hit back at a phony “consumer” group scorecard which grades states on their lending rules.  From the CFSA news release: 

The Consumer Federation of America (CFA) and the National Consumer Law Center (NCLC), two out-of-touch “consumer” groups which feel they have the authority to grade state lending laws, were given an “F” today by the Community Financial Services Association of America (CFSA) for deceiving media with a phony scorecard of state laws.

“These so-called ‘consumer’ groups have neither the knowledge nor authority to judge states’ regulation of lending practices,” said Tommy Moore, CFSA Executive Vice President. “Grading states based on an arbitrary interest rate cap may be a simple way to generate media attention, but it’s a terrible way to protect consumers and regulate lending practices.”

This excerpt from a church bulletin was sent to us by a payday lending supporter in Ohio upset that his church was interfering with his right to make his own financial choice:

Payday Lending Reform

The national payday lobby was granted the go-ahead by Ohio’s
Attorney General to start circulating petitions in support of a
referendum to rescind the reform law recently passed by the
Ohio Legislature (HB 545). In the teachings of our faith we have
many warnings about usury and exploitation of people. HB 545
established needed reform. The Diocesan Social Action Office
is discouraging parishioners from signing the petitions
circulated by the industry. The reform of payday lending was a
hard fought struggle that resulted in one ofthe strongest bills in
the nation. Advise your family and friends that HB 545
provided the necessary reform, as well as safeguards, for those
needing short term, en1ergency loans.

400,000+ citizens of Ohio decided to think for themselves and sign the petitions.

Over at RTOonline they are recognizing Amscot Financial for its community service efforts. 

Over at paydayfacts.org they’ve posted a heartfelt letter to Ohio voters from a payday lending employee. 

In an otherwise nice story about financial literacy, the reporter at the Newark Advocate in Ohio decides to take a cheap shot a payday lenders. 

This is the first story on the late-breaking court ruling yesterday.  The decision has not impact on the referendum.  From the piece:

Although it is a loss for payday lenders, the decision does not affect their current referendum effort. On Sunday, the lenders’ coalition turned in 422,000 signatures, and county boards of elections will determine whether the group has the 241,366 valid signatures needed to qualify for the ballot.

A payday-lending coalition sued in July, as it started an effort to overturn new regulations on the industry. Attorney General Nancy H. Rogers rejected an initial petition summary submitted by the group, calling it vague and inaccurate, forcing lenders to submit new language and delaying their signature collection.

The group, Ohioans for Financial Freedom, argued that the state law giving Rogers 10 business days to review the summary let her eat up about 15 percent of the 90-day window that the committee had to collect its signatures. The lawsuit argued that impeded the constitutional right of referendum.

The appeals court disagreed, upholding a lower court decision.

“The fact that the 10-business-day provision might work to restrict, rather than facilitate the referendum process under some plausible set of circumstances is insufficient” to overturn the law, said Judge Judith L. French, writing for the 2-1 majority.