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             6,500 Jobs Lost.

$200,000,000 taken
annually out of the
Ohio Economy.

No where to turn in
financial emergencies.

Is this what Ohio Needs?

All this due to self-serving
politics!

Self-Serving Legislation: HB 545 Payday Lending

I am a small business owner in Ohio with two payday stores that earned about 3.5% profit (ROI) last year. I am fighting not only for my livelihood and the jobs of my employees, but more importantly our American way of Life, Liberty, Free Choice, and Free Enterprise. Freedom? An interesting concept, if you can find it anymore. It is being taken away by overzealous activist and politicians who believe they can decide better than the individual as to the choices they be allowed to make.

It may interest you that a recent (March 11, 2008) Op-Ed piece in the Wall Street Journal stated, "Government should resist the temptation to save us from ourselves. Anguished at the fact that payday lending isn't perfect, some people would outlaw the service entirely or cap fees at such low levels that no lender could possibly stay in business. Anyone who's familiar with the law of unintended consequences should be able to guess what happens next.
Researchers from the Federal Reserve bank of New York went one step further and laid the data out: Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.
Since leaving office I've written about public policy from a new perspective: outside looking in. I've come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society. We should do our best to educate them, without diminishing the freedom to choose. "

The author of this piece may surprise you - Senator George McGovern of South Dakota. Sounds like he has learned something about Freedom that transcends shortsighted government intrusion, even when it may be well intended.

Those who desire to put the payday loan industry out of business in Ohio may be well intentioned but actually do more harm than good. Testimony by numerous knowledgeable people made it clear that the citizens of Ohio who use payday lending want it and most use it responsibly. Yes, some people misuse these loans just as some people misuse home loans, consumer finance loans, credit card purchases, home equity loans, credit card cash advances, and checking accounts. People in the payday industry have proposed ways to prevent the irresponsible borrowers from borrowing excessively. But fixing the problem isn't good enough for some activists and politicians. They have to show they have done something. Of course, it is easy to demonize an industry that most citizens don't use nor have much knowledge about.

Payday lenders are strictly regulated in Ohio and it is understood by people knowledgeable about the industry that the maximum fees of $15 per $100 borrowed is fair due to the cost involved in processing of such loans and the high risk involved to the lender. Most banks, savings and loans, and credit unions don't even want to make such loans under these restrictions. It simply is not profitable enough for them. The payday loan return on investment is not what people think it is – the fees simply reflect the fair cost of operating such a business. Those who seek to reduce the fees for a $100 payday loan to approximately $1.07. That's a 93% reduction in fees. That's not reform – it's simply an attempt to destroy an industry. We would be out of business. How would Starbucks like it if government said a Latte be reduced to 33 cents!

Destroying an industry that employs thousands of Ohioans, that rents many commercial properties, that pays taxes, pays utilities, that buys office supplies and equipment, that hirers services in the security, computer maintenance, software services and cleaning, that purchases advertising media, and provides a needed source of money to thousands of RESPONSIBLE borrowers is a terrible thing to do to hurt the lives of Ohioans and Ohio businesses.

I am disappointed and even disgusted with those who are spearheading this legislation. The Republican Party, the majority party, is especially an embarrassment. They are supposed to believe in free enterprise, freedom of choice, and individual responsibility. Do they have no integrity? Government control of business, limiting choice and freedom, and having government protect us from ourselves is what they are now advocating. Ohio is fast becoming "The Nanny State." Sadly, logic has done no good to stop this effort. Partisan politics is making a mockery of the legislative process.

Governor, at the same time you proudly say you are trying to protect less affluent and financially unsophisticated citizens from getting into "a cycle of debt", you are recommending that the lottery in Ohio be expanded. Now these same citizens will be caught in a cycle of gambling which only leads to financial hardship. If payday lending is bad, then so is the lottery! Governor Strictland, you are a Democrat, but what principals do you stand for? Are you for protecting, as you say, "those with the fewest resources" or not? Your inconsistency makes one wonder if political gain is the driving force in your life.

I certainly hope the Senators exercise good judgement and stop this inquisition that was started in the House. However, Governor Strickland, should the Senate pass HB 545, I would advise you to veto it. Tell the House and the Senate to work with the payday lenders to pen legislation that will enable them to make a fair profit, as well as education to discourage citizens from abusing this much needed and desired service.

If you disagree with our position here we would welcome your comments also.