Thursday, August 14, 2008

OHIO/CINNKY: Ohioans for Financial Freedom

Apparently, there is no YouTube of this new annoying political ad.

Here's the rundown: in June, the House, Senate, and the Governor put into effect a law that cracked down on the predatory lending of... drum roll please... check cashing establishments (part of HB 545). Most people know what these are (Check into cash anyone?), and I remember distinctly a conversation with my little cousin once about how they were the harbringers of "bad people" into his quaint little suburban Louisville neighborhood. (Teased it out, "bad people" = "poor" or "black" people.)

Now, the group Ohioans for Financial Freedom are desperately seeking the 230,000+ signatures necessary by Sept. 1 to put this up to a November vote... and by doing so putting out some really really bad and clearly biased ads.

Check here, because I am sure glad I wasn't the only one who noticed the weirdness of a farmer talking about needed to be tided over "just until payday."

Now, before my Republican friends scream about how this is incurring on the rights of businesses to do as they please, here is what the new law did:

-capped the interest rate from 391% to 25% (if you watch the video on the website above the $15 on $100 is the 391% rate on a two-week loan of $100... but that's not considering the fees that come with starting an account at one of these places)
-limit consumer borrowing at these locations -- max $500 a time, four times a year (so you don't cycle the debt)
-extends the loan term from two weeks to 31 days
(info from the Dayton Business Journal)

Doesn't sound that unreasonable, know? In fact, I wish someone would have protected me against myself when it came to loans and debt... I would have greatly benefitted from some better caps on my credit cards :-).

Or, you know, learning that you can, in fact, keep spending on your card for weeks and months after it's already overdrawn.


Jere Keys said...

Ugh. I remember getting sucked into these payday loan scams when I was in college. It was only after getting my checking account canceled by my bank for one too many overdrawn checks that I realized what a bad spiral I was on.

There's free enterprise, and then there are businesses out to take advantage of the vulnerable and desperate.

Thanks for providing some clarity on this issue.

Barry Floore said...

hey, no problem. just watch what you're signing.

dramaqueen said...

I find it interesting that the payday lending industry is trying to scare consumers by suggesting that HB 545 will kill the payday lending industry by capping the interest rate at 28%...which is totally reality, the powers that be in the industry are looking down from their ivory tower and worrying about their profit margins and the fact that HB 545 will cause an inevitable restructuring of the industry; something that has been needed for a long time. So what if some people lose their jobs? It may or may not happen. So what if a certain percentage of PDL's go out of business? Again, it may or may not happen. What is certain is that the customer base that patronizes these businesses is out there today and will be out there tomorrow and will ultimately benefit from lower interest rates. And the saavy PDL's that stay in business will continue to cater to that customer base and an expanded base once interest rates are capped; they will probably make up their business on volume and will probably end up diversifying their product base to lure even more customers and in all likelyhood, will end up expanding their locations, absorbing the former locations of those PDL's that ran scared. Having watched the industry rape the consumer and charge exorbitant fees, I feel the PDL industry is long overdue for a cleansing enema...