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Arizona and Ohio Go to the Ballot Box to Reject Payday Lending
By Leslie Parrish, Senior Researcher, Center for Responsible Lending
On Tuesday, Ohio and Arizona voters not only selected leaders to deal with the credit crisis on the national stage, they also roundly rejected ballot initiatives sponsored by the payday lending industry in an effort to curtail high-cost lenders from preying on vulnerable families.
My organization, the Center for Responsible Lending, advocates for reasonable interest rate caps that apply to all small loan products, including payday loans. While these loans are marketed as a quick and easy way to deal with an occasional unexpected expense, their high cost and short two-week term typically cause borrowers to become trapped in a cycle of debt where they must take out a new loan every pay period. The average borrower takes out more than eight loans a year (usually on a consecutive basis) at the cost of around 400% APR. More often than not, borrowers ultimately end up paying more in fees than they actually receive in credit.
Payday lending in Ohio and Arizona grew rapidly once lenders were granted an exemption to their states' small loan interest rate caps which allowed them to charge 400% annual interest. Hearing of problems stemming from the payday lending debt trap, Ohio policymakers overwhelmingly passed bi-partisan legislation to prohibit any small loan lender from charging more than 28% annual interest earlier this year. Similarly, Arizona legislators refused to renew the authorization of payday lending in that state, which is set to expire in July 2010.
Seeking to rebuke policymakers, the payday lending industry took the issue directly to voters through the ballot initiative process in each state. The industry poured over $30 million into their campaign, vastly outspending a broad coalition of grassroots groups in each state concerned about the negative impacts of payday lending. Voters in Ohio and Arizona, however, overwhelmingly rejected these referenda by large margins-with 60% and 63% casting their ballots against the payday lending industry respectively.
We have seen the impacts of predatory subprime mortgage lending reverberate from neighborhoods on Main Street to our larger financial system on Wall Street. At a minimum, this has shown the inadequacy of granting mere "access to credit"-indeed, if this credit crunch has shown us anything, it's that we are drowning in credit...and debt. Instead, Ohio and Arizona have voted for credit to only be offered on reasonable terms, giving struggling families a fighting chance to better secure their financial futures.
Ms. Parrish can be reached at Leslie.Parrish@responsiblelending.org
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Voters Repudiate Predatory Lending!
I'm glad Ohio voters saw through the lies and deceptive advertisements of the payday lending industry and voted overwhelmingly to pass issue 5! This is a very positive development for Ohio's families, particularly those who were caught in the never-ending cycle of payday lending debt. Ohioans realized that payday lending is a defective and predatory product designed to trap people in debt. Voters strongly repudiated over a decade of predatory payday lending! This is a great victory for Ohio's consumers!
lending
I can't beleive that you actually beleive that the election outcomes in Arizona and Ohio give struggling families a fighting chance. You know as well as anyone that struggling (i.e poor) families will suddenly find themselves with no place to borrow further weakening the economy. The CRL hopes that they can eventually get the business that they have missed out on over the years by offering a similiar product and calling it something different. Your concern is overwhelming.
Facets of the Facts
I find it always so unfortunate when people become polarized on an issue like this and allow millions of dollars to be spent promoting only the option they like the best. Doesn't anyone see that these poor families just need a way to pay their bills on time? Without some alternative to the payday loan industry, there will be another huge problem by the time the next vote comes around and the process of advertising propositions in self interest will begin again.
You can always count on
You can always count on payday loans when you are in need of money. Say for instance, an unexpected emergency has arrived. Payday loans are such a great resource. When you’re already stressed out from an emergency, the last thing you need is more stress. The victims of Hurricane Katrina, on the other hand, have been waiting for years for the things they need—like new homes! Brad Pitt is trying to help. Pitt is the spokesperson and lead of the Make It Right Project, which rebuilds homes in New Orleans. One of the hardest hit neighborhoods hit in New Orleans is the Lower 9th Ward. Pitt was compelled to help after witnessing the devastation and ruin there. Make It Right is going to build 150 homes in the Lower 9th Ward. After waiting nearly four years, Pitt is projecting that families will be in their new homes by the end of summer 2009. Great job-Brad Pitt and everyone who is helping in this project. I cannot imagine having to wait four years for emergency aid. I'm so glad that I know when I need emergency aid, I can get almost immediate help. Payday Loans are available to me at my convenience. I won’t have to worry about waiting one day, let alone years to get the help I need. Click to read more on Payday Loans.
Why to reject Payday lending?
Arizona and Ohio voters went to the ballot box to select their leaders. If they were going to select someone to reject the payday lending it is going to be critic for themselves. The reason is most of the Arizona and Ohio people has gone for payday loans during their critical conditions. When the payday loan is completely rejected the lenders can go for some other business but the people will suffer during their emergency need for cash.
Arizona and Ohio voters went
Arizona and Ohio voters went to the ballot box to select their leaders. If they were going to select someone to reject the payday lending it is going to be critic for themselves. The reason is most of the Arizona and Ohio people has gone for payday loans during their critical conditions. When the payday loan is completely rejected the lenders can go for some other business but the people will suffer during their emergency need for cash.
I think it was a mistake.
So what's going to happen right now? I can tell you that, legitimate payday loan companies will have to shut down and people will have to borrow from offshore payday loan lenders and pay higher fees, plus the state will get no tax revenue from those offshore lenders.
Whether the customer is
Whether the customer is going to be interested in taking advantage of it, whether it has marketability and whether it will provide enough revenue to keep the lights on are questions still to be answered.