Payday Lenders Are Back | Rowsey Blog

Payday Lenders Are Back

June 8, 2008

Did you ever think that the payday loan shark lenders would go silentely into the night?  I have to say that I knew that would never happen.  This is obviously a lucrative buisenss.  When you are out and about you can see how many of these companies are popping up all around the poorer areas of ohio.

According to the Dispatch, the payday loan sharks are going to take their case to the people.

The payday industry has hired Columbus attorney David Paragas to act as counsel, coordinate the ballot effort, and explore potential legal challenges to the law. Ohio Petition Co., which guarantees clients that their issues will qualify for the ballot, is expected to collect the signatures. The company is working separately with a union-led coalition on a ballot initiative mandating paid sick days.

DeVault said the payday industry will “devote the resources necessary to make sure (voters) understand what is at stake.”

Faith said he thinks Ohioans will side against payday lenders, but he is worried that the industry can vastly outspend defenders of the law in a campaign.

Under the new law, lenders are allowed to offer a two-week loan with a 28 percent annual interest rate and a one-time $15 origination fee. A $300 loan can require about $18 interest, compared with the $45 charged today.

The payday industry is working on a similar ballot campaign in Arizona, where a law threatens to wipe out the short-term, high-interest lenders in 2010.

Remember people of Ohio…these people care only about themselves.  They are NOT fighting on your behalf.

Posted by Jason Rowsey | Filed Under Money Matters, Ohio Government 

Comments

6 Responses to “Payday Lenders Are Back”

  1. Ben Keeler on June 8th, 2008 1:50 pm

    I would never have used a payday lender, but I wasnt in agreement with shutting them down.

  2. Paul Lambert on June 9th, 2008 7:21 am

    My Dad was a kid during the Great Depression, and that experience shaped a good deal of his thinking. I remember him being very angry that many, if not most, of the restrictions implemented following the crash of the banking industry have been gradually unwound. For example:

    - Don’t know if you recall that in WV, branch banking was not permitted. Banks existed in one building and one building only. The idea was that no bank got so large that it’s failure would create much of an impact (although being WV, I’m sure some part of it was to protect established banks from competition, eg a Charleston Bank taking over the Parkersburg market).

    - Commercial banking, investment banking and insurance could not be mixed. An enterprise could be one of these businesses, and one only. The key objective was to protect retail depositors from having their money put at risk by speculation and consolidation.

    - And finally, there were usury laws implemented to keep individuals from digging themselves into a hole from which they could never recover.

    Dad was a hard-core Democrat, not because he was an economic liberal, but because he didn’t trust big business. For him, the Democratic Party was the protector of the working man - sort of the national union standing against the Republican monopolists.

    As a young man, I dismissed much of his thinking as old fashioned. But you know the old adage - the old I get, the smarter my Dad becomes? That’s not just the case for a young man emerging from adolescent rebellion, but true at every stage of life. Wish he were here for one more Father’s Day.

    I won’t declare myself to be either Democrat of Republican - I’ve come to distrust the whole party system. But I do believe that free markets solve most problems as long as we don’t allow monopolies to develop. So I’m stuck as to whether we should be restricting these loan-sharking businesses, or letting them be. They must provide an important service, or they wouldn’t exist.

    But the same argument can be used to say we should make dealing drugs and prostitution legal. Maybe the distinction is whether the existence of a business promotes other criminal activity. Clearly there is connection between drugs, prostitution, thievery and murder.

    But is there crime only because drugs are illegal (which drives up the price)? All that kind of crime was connected to the alcoholic beverage industry during Prohibition. Now it’s a huge legitimate industry and source of much tax revenue. Did Prohibition eradicate alcoholism? Nope. It just made it more dangerous to drink and created a business opportunity for the Mafia (and quite a few moonshiners!).

    It’s a tough balance - individual liberty vs the wellbeing of the State.

  3. Jeff C on June 9th, 2008 12:19 pm

    Why would any of us care. If these transaction were made between concenting adults and the terms were disclosed what right did the Governement have to shut them down. Wait a minute, the gas stations are charging too much…are they going to get closed down. How about Cable TV!! This discussion is nuts. I hope they do put the issue on the ballot.

  4. Ben Keeler on June 9th, 2008 5:04 pm

    exactly Jeff C

  5. Jason Rowsey on June 12th, 2008 8:49 am

    The government regulates many parts of our lives. Do we want to live in a society that is a free for all? We have to look out for the wellbeing of everyone. Unfortunately not everyone is able or capable of making good decisions.

  6. Paul Lambert on June 12th, 2008 12:27 pm

    I don’t agree what we have to look out for everyone. Life is not fair, and not everyone has the brain power or skills to do well at it.

    Unfortunately, natural selection has gone bizarro in the human species as throughout the world, the birthrate is now inversely proportional to education and socioeconomic status. The consequence is that the world (certainly our country) is filling with ever greater numbers of people who are dependent on the government for survival.

    Population control is the single greatest imperative for the future of our planet. The Chinese had the guts to do something about it with their One Couple - One Child policy.

    Harsh words, but the truth I fear.

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