Washington, DC –In a letter to Ohio Governor Ted Strickland, the Community Financial Services Association of America (CFSA) urged a veto of the recently passed payday lending bill that effectively bans the payday advance industry in Ohio.I've got mixed feelings on this one. First of all, I think it is crazy to outlaw stupidity. If you can't afford the terms of the loan, don't take it. I look at this the same way I do the "crisis" in housing...if you are dumb enough to get locked in to something that you can't handle, you deserve what you get.
D. Lynn DeVault, CFSA president, writes, “Vetoing this legislation would ensure that working families continue to have access to a state-regulated small, short-term credit option and that the six thousand Ohioans employed by the payday lending industry are not at risk of getting turned out into the state’s unemployment lines.”
DeVault writes that “politics got in the way of good public policy” and details the negative consequences of eliminating the payday advance industry in Ohio, including:
Economic Impact
The industry employs 6,000 Ohioans who are paid nearly $173 million annually in salaries and benefits.
Lenders occupy a total of 1,600 locations, comprising 4.8 million square feet of office space in Ohio, for which they pay $77 million annually in rent revenue to landlords across the state.
In addition to the $250 million the industry contributes directly to the state’s economy for jobs and real estate, they pay a whole host of local vendors for services ranging from advertising and office supplies to security systems and banking services.
Impact on Customers
Due to a lack of credible alternatives, customers will be forced into more expensive, less desirable or even unregulated credit alternatives that are completely devoid of consumer protections.
In Ohio, there have been fewer than 75 complaints in five years, out of hundreds of thousands of transactions. This would not be the case if the accusations of our critics were true.
Even Ohioans who may not use payday advance loans have strong feelings about the issue. A recent poll by Zogby International found 84% of likely voters in Ohio believe citizens should be free to make their decision about what kind of credit they can use.
“We are asking for a regulatory framework that allows reputable lenders to stay in the market and offer a state-regulated service to consumers who have exhibited a compelling demand for this credit product,” writes DeVault.
She adds, “The day following Senate passage of HB 545, some payday lenders stopped making loans and are doing their best to collect the loans that are outstanding. Others began laying-off employees and closing stores. The potential for the human toll of HB 545 is significant and unsettling. Politics have real life consequences.”
The full letter is available here (PDF).
On the other hand, I do think that the payday lending industry is particularly nefarious in the way it deals with people.
Sidebar: 1600 locations in Ohio and half of them are in Butler County on Route 4... Okay, I exaggerate; but not by much...
UPDATE 1: Quoth Speaker Husted, “Some people shouldn’t have access to credit because they’ve demonstrated they can’t handle it.” Unbelievable... Husted's support and arrogance alone is enough to make me question the wisdom of this bill.
