Glass City Jungle

In this week’s edition of the Sojourner’s Truth, you might think when you get to this part of Reverend Donald Perryman’s column entitled, Black and In the Red:

It’s too expensive to be poor and African-American,” states [Fair Housing CEO Kathy] Broka. “You pay higher interest for the loan. The higher payments cause you to be late, hurting your credit score. Your insurance costs are higher. If you need to make emergency repairs the loan shark-like payday loans can cost as much as $75 for two days on a $500 loan. And you can almost pass by 16 payday lenders or make four bus transfers before you finally get to a bank.”

“ If you need a car, you can get one – but only at a buy here/pay here lot at 24 percent interest. And when it breaks down, you’ve got to go right back to the payday lender because when the banks won’t loan the money others come in with their outrageous fees.”

We don’t have that problem in Ohio, after all we passed Issue 5, remember that amendment that got so much attention because it was going to “rid Ohio” of those payday lenders?

In a stunning victory for Ohio consumers, Issue 5, the payday lending rate cap referendum, passed on Election Day by a margin of nearly two to one. By affirming House Bill 545 and its 28 percent APR rate cap, voters renounced 13 years of unregulated corporate greed. Despite industry’s $22 million campaign budget (to our $500,000), Ohio voters recognized payday lending as defective, predatory, and intentionally designed to trap borrowers in debt.

Apparently whoever wrote Issue 5 didn’t take enough care with the language (or the large issues some of us tried to raise) and some of the payday lenders just started using other parts of Ohio’s laws for short term loans and mortgage loan laws so they can still collect APRs of 432 percent (under the small-loan law) or 680 percent (under the mortgage-loan law). Of course no one bothered to ask when the target was the payday lenders why any lender, payday or other wise should be allowed to charge that high of an interest rate but? The payday lending ballot issue was directed at one industry rather than at the financial system in general.

So, no worries right? After all the General Assembly has jumped into action after not being happy with the electoral outcome of the casino ballot issue, so it should have taken them no time at all to craft legislation to address the small loan and mortgage loan problem…Right?

Not quite…Representative Matt Lundy introduced House Bill 209 in June, there has been testimony taken on the bill but it’s still in the Financial Institutions, Real Estate, & Securities Committee and it does not appear in doing any searching, anyone else has come up with an alternative fix, though some had concerns about Lundy’s approach.

I personally have not changed my position on Issue 5, especially since it did not address bank fees, check fees and as we’ve seen the higher charges allowed under current Ohio law and as Perryman’s piece points out, those who are poor do not have access to banks, making sure people are not being unfairly taken advantage of is one thing, passing bad laws that don’t really solve the larger problem is another…And for all of those who were convinced that the poor would be better off without payday lenders? It appears there were no other solutions offered, despite those who stated the credit unions would step up with enhanced programs that have been used as a viable alternative that saved people money. Else, the payday lenders would have not found other laws they could use, they would have been driven out of business by the market place…