The other alternative, besides banning these loans, would be to have payday lenders require borrowers to sign some sort of document that clearly states, "This is a two-week loan at X% APR and Y% EAR.  This rate is Z times the average rate for credit cards in the state of Ohio" or something similar.

 

Also, the prediction was that if they were banned, banks and credit unions would start to offer similar services, and that is exactly what has happened with my bank.  The difference is that my bank fully discloses something to the effect of "This is an extremely high-interest loan that should be used only in emergencies.  Other lower-cost options may be available to you," and then proceeds to compare the cost of the loan with the cost of just paying a late fee on your bills that are due.

Report: Remaining Ohio payday lenders charging more

Business Courier of Cincinnati - by Dan Monk Senior Staff Reporter

http://cincinnati.bizjournals.com/cincinnati/stories/2009/03/09/daily14.html

 

Southwest Ohio has 87 fewer payday-lending stores than it did a year ago, but many of the stores still in business are charging consumers more for short-term loans than they did before Ohio capped interest rates at 28 percent.

 

So concludes a new report on the state of the payday-lending industry in Ohio by the the Housing Research & Advocacy Center, a Cleveland-based group that’s calling for a new legislative crackdown on the industry.

 

“Payday lenders have ignored the will of the legislature, the governor, and the people of Ohio, who voted overwhelmingly to cap the interest rate on short-term loans at 28 percent,” said Jeffrey Dillman, the center’s executive director and co-author of the report. “It is outrageous that payday lenders are now charging even higher rates for their products.”

Just a little data to toss into the earlier discussion - I've worked with a company that collected on these loans from a payday advance lender.  Folks cut a check for $192, say, and walk out with $175 in cash.  A week or so later, the check gets cashed, and the APR ends up clocking in at 300%+.  Due to truth in lending laws, that $17 must be presented as an APR, and it looks pretty outrageous.

 

However, if your check bounces - you closed your bank account, say - and two years later a collection agency catches up with you, do you know how much money they try to collect from you?  That's right, $192.  Which makes your effective APR something like 5%.

 

NOBODY collects $3,000 from a bounced payday loan check.  It's NOT an interest rate.  Yes, there is a time value of money, I understand the math here - but that $17 is a FEE.  They're not allowed to call it that, but that's what it is.

 

Q:Wondering about opinions on new bill that passed in ohio about payday lending? What do you think?

 

New law passed in Ohio that will eliminate payday lending industry. they put over 7,000 out of work and eliminate short term loans for people that don't have good enough credit to go to a bank and get a short term loan. I would just like to get some people's opinion on this..

 

 

Thank you Riverviewer, that is what I have been trying to say all along.

The fact is, you cannot simply legislate away the need for folks to get short-term bridge loans.  Folks have always needed short-term bridge loans, and it will be interesting to see where this need ends up getting met.  For many folks, I imagine it will be credit cards (where you'll pay a cash advance fee probably higher than the one the payday loan guys charged, plus 21%+ interest on it, with no incentive to pay it off right away - at least the payday loan can't float for years (there are already laws restricting rolling them over)); for others who don't have access to collateral-free credit, it will be pawn shops, where they'll have to put up their personal possessions at a tremendous discount (quick quiz: what's the APR on a $300 TV that gets hawked after 10 days for a $150 loan?); and others will go where the money is - organized criminals, local loan sharks, etc., where they'll pay in interest and possibly services.  Oh, and others will just pay the late fee to their landlord (another quiz: what's the APR difference between the 10% late fee on your $450 rent and the $20 fee on the payday advance loan?).

 

I wish folks never needed short-term bridge loans, and I'm happy that when I did, I had friends with money who could help me out...unfortunately, legislation won't get rid of the need, nor provide friends with money...it seems to me that all this law does is it eliminates another option for those on the margins already.

 

In the same sense, the mafia helps some people get through life with "bridge loans."  But that doesn't mean the mafia should be legal.  The exorbitant fees paid to loan sharks helps perpetuate their market by ensuring that nobody ever has any savings.  The answer to poverty is not 300% loans.  The answer is getting them the same loan terms others get, on the way to eliminating their poverty altogether.  I'd like to see Trump get rich if he paid poor people prices for things.

If these were 300% loans, I'd agree with you, eliminate them.  But they're not - did you actually read what I wrote above?

 

It sounds really nice to say we should get them the same loan terms others get - but high risk loans require higher interest and fees - if six loans out of every hundred go bad, you've gotta charge 6% above the going rate simply to break even.  It's really just simple math, and wishing it were different doesn't change it.  Hell, I've got A+ credit, and I still paid something like 11.9% APR on a signature loan I took out to buy a car for a friend a few years ago - the car was too old for a bank to accept as collateral, so it was that or self-finance.  That's twice the rate my mortgage is at, and far higher than my HELOC, but it's unsecured.

 

I wish high risk folks weren't high risk, I really do - but it's almost definitional here - we can't just mandate that they be more reliable at paying back their debts...

 

It isn't surprising that certain people are at a higher risk to miss bills, when their bill for the same exact good or service is higher than it is for others.  Vicious cycle, foregone conclusion, whatever we want to call it it's bad.  A situation in which being poor means higher bills will necessarily lead to additional poverty and stratification.  This leads to more "specialized services" like payday lenders, simmer for a generation, and the ghetto just got twice as big again.  Discrimination against the poor must end.

But it's not the exact same service - cashing a $300 check at a bank where you've got $500 on deposit is a VERY different service from cashing a $300 check at a corner store where you've got nothing but your promise and the paycheck for a job you may have just lost.  If a rich guy walks into a payday loan place, he'll pay the same thing a poor guy pays; and if a poor guy goes into a bank, he'll get Totally Free Checking like anyone else.  I know, because I've been plenty poor, no job, new in town, and I walked into a bank and got Totally Free Checking.  Only had $50 to open the account.  The interest rate on my credit cards is pretty much the same today as it was when I made $6/hour, 30 hours/week.

 

And I don't think you break this cycle by eliminate financial options for the poor.  As I said, folks will always need short-term loans to pay the rent or a car loan or buy groceries until the next paycheck comes in.  Used to be they could go to a payday loan place, pay a $20 fee, and get $150 or $200 for a week - now they can't.  Now they'll hock their stuff at a pawn shop, they'll pay a $40 late fee to their landlord, they'll bounce a check, or they'll ask a favor of the guy in the neighborhood who always has money...

 

Discrimination against the poor must end.

Hey, I'm right there with you.  Let's fight poverty, let's encourage businesses to open, let's patronize them, let's build good public transit, quality schools, etc., etc.  But let's not just make ourselves feel better by cutting off options for actual poor folks.

 

But it's not the exact same service - cashing a $300 check at a bank where you've got $500 on deposit is a VERY different service from cashing a $300 check at a corner store where you've got nothing but your promise and the paycheck for a job you may have just lost. If a rich guy walks into a payday loan place, he'll pay the same thing a poor guy pays; and if a poor guy goes into a bank, he'll get Totally Free Checking like anyone else. I know, because I've been plenty poor, no job, new in town, and I walked into a bank and got Totally Free Checking. Only had $50 to open the account. The interest rate on my credit cards is pretty much the same today as it was when I made $6/hour, 30 hours/week.

 

And I don't think you break this cycle by eliminate financial options for the poor. As I said, folks will always need short-term loans to pay the rent or a car loan or buy groceries until the next paycheck comes in. Used to be they could go to a payday loan place, pay a $20 fee, and get $150 or $200 for a week - now they can't. Now they'll hock their stuff at a pawn shop, they'll pay a $40 late fee to their landlord, they'll bounce a check, or they'll ask a favor of the guy in the neighborhood who always has money...

 

I often make a similar argument in favor of drug legalization.  But I don't think this is the same at all.  The difference is that with drugs, all consumers are forced into the black market.  Here, only the poor ones would face that.  Therefore, I have a harder time here saying let's legalize something unpleasant because everyone would be better off.  This only applies to certain people, and therein lies the problem. 

 

A closer analogy is that Donald Trump doesn't use payday lenders just like southern whites didn't use colored restrooms.  To say blacks would have no restrooms if segregation ended would be to miss the point entirely.  Give everyone equal access to finance, regardless of what deposits they started with, and see what happens over a few decades.

A situation in which being poor means higher bills will necessarily lead to additional poverty and stratification.  This leads to more "specialized services" like payday lenders, simmer for a generation, and the ghetto just got twice as big again.  Discrimination against the poor must end.

 

In my opinion, it's a larger problem that goes beyond payday lending. We've become a society that covered up or ignored inequalities in the past by a large number of people living on credit. Second class mortgages and credit cards gave an illusion of growth and people losing their jobs (mostly those at the bottom) feel defeated. I don't see consumer behavior changing much either. There is a very American behavior pattern - if you're unhappy - go shopping.

 

28 percent of Americans are illiterate. Americans in general aren't very well educated. We've been decieved by labor market statistics that were dressed up and brightened. When you factor in 1.5 million people in prisons and part time employment, the unemployment rate looks much better than it does in a lot of European countries that are actually much better off.

In my opinion, it's a larger problem that goes beyond payday lending. We've become a society that covered up or ignored inequalities in the past by a large number of people living on credit. Second class mortgages and credit cards gave an illusion of growth and people losing their jobs (mostly those at the bottom) feel defeated.

 

28 percent of Americans are illiterate. Americans in general aren't very well educated. We've been decieved by labor market statistics that were dressed up and brightened. When you factor in 1.5 million people in prisons and part time employment, the unemployment rate looks much better than it does in a lot of European countries that are actually much better off.

 

Exactly.  All we do is cover up the problem with increasingly exploitative bandages.

In my opinion, it's a larger problem that goes beyond payday lending. We've become a society that covered up or ignored inequalities in the past by a large number of people living on credit. Second class mortgages and credit cards gave an illusion of growth and people losing their jobs (mostly those at the bottom) feel defeated. I don't see consumer behavior changing much either. There is a very American behavior pattern - if you're unhappy - go shopping.

 

EXACTLY.  :clap: If it weren't for credit, this country would look a whole lot more like it did in 1929.

There is a very American behavior pattern - if you're unhappy - go shopping.

 

You say that, like it's a bad thing.  :wtf:  :wtf:  :wtf:

 

 

There is a very American behavior pattern - if you're unhappy - go shopping.

 

You say that, like it's a bad thing.  :wtf:  :wtf:  :wtf:

 

Well you're a rare case. To ordinary people, shopping/buying helps validate or boost ones self worth. You walk down 5th avenue on the UES and see a Prada Store. You know you have access to it. Most people know that they're shut out from it. But the architecture of the facade is such that the inside of the store is brought outside, at least visually - because of how glass takes up most of the frontage. It can make people very unhappy to see what they can't get access to. That's really what I found disturbing about Manhattan. The fact that you only see it, amplifies the sense that its inaccessible. It makes me wish they were brick walls. People will stretch their limits to obtain that stuff.

 

IMO if you want to learn about the ridiculousness of consumer culture, there's no better place to learn about it than Manhattan.

IMO if you want to learn about the ridiculousness of consumer culture, there's no better place to learn about it than Manhattan.

 

Having lived in Beverly Hills, I disagree with you on that one, though manhattan would be a close 2nd.  :)

I have a friend who moved to Hollywood. It was his 'dream' to be a Hollywood writer. He makes practically minimum wage and works at a gym there. The clients are full of people like Ryan Murphy and Jessica Alba. He sleeps on an air mattress and gets rejected at the door of every night club he tries to get into lol

 

 

There is a very American behavior pattern - if you're unhappy - go shopping.

 

You say that, like it's a bad thing.  :wtf:  :wtf:  :wtf:

 

Well you're a rare case. To ordinary people, shopping/buying helps validate or boost ones self worth. You walk down 5th avenue on the UES and see a Prada Store. 

 

I disagree to an extent. "Ordinary people" usually (hopefully) have (or once had) values that go beyond the superficiality and shallowness of those that require consumer goods to validate one's self worth. But the obsession with luxury items, rooted in greed and envy, reflects the complete loss of values--to say nothing of lack of class--that has permeated the culture in the last 20 years or so and seeped like a cancer into the minds of "regular" people. If you "need" a certain brand or label to make you feel better there's a great deal lacking in your life that no amount of goods is going to fulfill. Hopefully some of this will change with the economic downturn.

Well unfortunately you can't validate your self worth through your skills. Most people aren't able to use the skills they acquired in H.S. and college. American corporations don't invest in their own workers like they do in other countries (with the exception of some very large companies). There's really no incentive to retain employees in this economy. American workers have very few opportunities to be retrained or use the skills they possess. They're also very uncertain about their future at their company. So what do we do when we're full of anxiety and unhappy? We spend! The real winners in times like this are first generation immigrants. They aren't slaves to consumer culture.

Well unfortunately you can't validate your self worth through your skills. Most people aren't able to use the skills they acquired in H.S. and college. American corporations don't invest in their own workers like they do in other countries (with the exception of some very large companies). There's really no incentive to retain employees in this economy. American workers have very few opportunities to be retrained or use the skills they possess. They're also very uncertain about their future at their company. So what do we do when we're full of anxiety and unhappy? We spend! The real winners in times like this are first generation immigrants. They aren't slaves to consumer culture.

 

But your response seems to suggest that today’s spending spree is in response to recent economic woes, when in fact it’s been going on non-stop for the better part of a generation; so the problem is obviously deeper than just not being able to “validate your self worth through your skills.” (Don’t get me wrong, if someone wants to buy a two-thousand dollar set of sheets, that’s fine, they should have the opportunity, but if that kind of purchase defines who you are, then something is wrong) If things are difficult for the time being, you innovate, improvise, and re-invent. Americans are also known as being more flexible than people in other countries. I don’t know where you get the idea that Americans “have few opportunities to be retrained of use the skills they possess.” Are we living in Cuba?? Maybe under the new regime we are.

 

IMO if you want to learn about the ridiculousness of consumer culture, there's no better place to learn about it than Manhattan.

 

Having lived in Beverly Hills, I disagree with you on that one, though Manhattan would be a close 2nd.  :)

 

Honestly, I think NYC is worse, because you're walking.  In BH, you "drive to " Rodeo, which makes it feel more exclusive and unobtainable at the same time  :| .

 

NYC is such a: 

[*]I see it, I must be the first to have it city

[*]Street level marketing is at overload levels

[*]People want to keep face and keep up with the Jones

[*]The most superficial people (ie Sex & the City and Gossip Girl) are always shown in something we want.

In the 10 years Ive lived here part time, it's only gotten worse.  I'm partially to blame as I put the "message" out there.

 

I actually know people (not personally but via research testimonials for magazine articles or TV shows) that have more department store credit card debt, than they make a year.

 

But this isn't new.  I grew up in the "flaunt it if you got it" 70's & 80's.  Where you lived; what you wore; what type of car your drove, where you worked, we're all so important.

 

Well unfortunately you can't validate your self worth through your skills. Most people aren't able to use the skills they acquired in H.S. and college. American corporations don't invest in their own workers like they do in other countries (with the exception of some very large companies). There's really no incentive to retain employees in this economy. American workers have very few opportunities to be retrained or use the skills they possess. They're also very uncertain about their future at their company. So what do we do when we're full of anxiety and unhappy? We spend! The real winners in times like this are first generation immigrants. They aren't slaves to consumer culture.

 

David, some immigrants are worse than Americans.  They get here (to the states) and get caught up in the "access" to everything.  I've seen it.  They are like professional athletes who have never had anything and bam!  They have money and opportunity.  So they spend to fit in.

But your response seems to suggest that today’s spending spree is in response to recent economic woes, when in fact it’s been going on non-stop for the better part of a generation; so the problem is obviously deeper than just not being able to “validate your self worth through your skills.”

 

What I meant is that the culture of spending is finally biting us in the @ss when the money is no longer flowing. It's a long term cultural attitude that was fine for a while but it doesn't work when we're suddenly shocked by an unpredictable economic catastrophe. Personally, I'm guilty of spending more money when I'm NOT employed. It's just human behavior. Everything we do is to improve the way we feel.

 

(Don’t get me wrong, if someone wants to buy a two-thousand dollar set of sheets, that’s fine, they should have the opportunity, but if that kind of purchase defines who you are, then something is wrong)

 

 

This quote reminds me of that movie fight Club (I bought the special edition dvd - it's one of my favorite movies). The main character had no passion. You hear it in his monotone voice. He worked a menial desk job and found meaning in his life by furnishing his house with sh!t from an Ikea catalog. Eventually he set his apartment on fire and Brad Pitt told him that everything you own ends up owning you. I don't know how that relates to this but anyway, what were we talking about?

 

If things are difficult for the time being, you innovate, improvise, and re-invent. Americans are also known as being more flexible than people in other countries.

 

The problem is that you have to be flexible in an increasingly globalized economy and they're providing some pretty tough competition in Europe, China, India, etc. Unless you get a great education in America and go to a great university, your education is subpar. Europeans think Americans are stupid. They're not stupid, they're just not retrained often enough.

 

Germany for instance, exports high tech machines all over the world. Their workers are also better trained. They have stellar apprenticeship programs. It's incredible how many engineers, programmers, and researchers we have to import to the U.S. Bill Gates has talked about this extensively.

 

There's also the issue of the marginalization of old people. I think ageism was brought to the mainstream's attention back in the 70's or 80's after feminism and civil rights but there's only so many issues a society can deal with at once. There are so many talented older people with knowledge and wisdom and firms can't be bothered to bring them to a modern level. I have an uncle from Scotland. He went to a good Art school in Vienna and he was an amazing billboard painter (he also did a lot of cool freelance stuff) I mean, I've never seen such a good artist in my life. Then when they switched from using real painters using canvas for billboards to using graphic designers, he was out of a job. His skill was rendered irrelevant - but the company didn't bother to retrain him.

 

In terms of innovation, Wall street and Silicon valley paint a false picture. Most U.S. firms aren't very innovative. They're inflexible in dealing with workers and their consumers. Nokia is innovative. Microsoft is a monopoly. U.S. corporations should look at Nokia as a model. The Bush regime also screwed over the Small Business Bureau which is where the majority of innovation from knowledge-based companies come from.

 

I don’t know where you get the idea that Americans “have few opportunities to be retrained of use the skills they possess.” Are we living in Cuba?? Maybe under the new regime we are.

 

It's funny how (Republicans) tend to associate Socialism with Latin America (worst possible case scenario). I think Cubans will ultimately end up finding ways to use their money in a much more modern way. Their leaders are just autocrats and starved for power. That kind of gov't never works for long.

 

The socialist countries who are coping fairly well with global capitalism right now aren't speaking the old 20th century rhetoric.

But your response seems to suggest that today’s spending spree is in response to recent economic woes, when in fact it’s been going on non-stop for the better part of a generation; so the problem is obviously deeper than just not being able to “validate your self worth through your skills.”

I have an uncle from Scotland. He went to a good Art school in Vienna and he was an amazing billboard painter (he also did a lot of cool freelance stuff) I mean, I've never seen such a good artist in my life. Then when they switched from using real painters using canvas for billboards to using graphic designers, he was out of a job. His skill was rendered irrelevant - but the company didn't bother to retrain him.

 

 

you make good points and I'm too tired to attempt to address them all (that ageism thing--lol), but if your uncle is a such a talented painter (and I believe you when you say he is), his skill was hardly "rendered irrelevant." An true artist becomes one for the love of art (sounds corny, but so they say), and he can pursue his love of painting as a fine art (you know, like Picasso, Matisse & those guys)

My brother and I were car shopping at the same time and we both wanted the same model car.  He bought his and let me know that the color I wanted was at his dealer in Canton.  I called his salesman and bought it over the phone, but I told him I wanted 1 more option than my brother got, at no cost to me.  When he was done laughing, he threw in a wooden gear shift knob ($150) for free.

^THAT is some funny stuff...

My brother and I were car shopping at the same time and we both wanted the same model car.  He bought his and let me know that the color I wanted was at his dealer in Canton.  I called his salesman and bought it over the phone, but I told him I wanted 1 more option than my brother got, at no cost to me.  When he was done laughing, he threw in a wooden gear shift knob ($150) for free.

 

LOL!

 

This quote reminds me of that movie fight Club (I bought the special edition dvd - it's one of my favorite movies). The main character had no passion. You hear it in his monotone voice. He worked a menial desk job and found meaning in his life by furnishing his house with sh!t from an Ikea catalog. Eventually he set his apartment on fire and Brad Pitt told him that everything you own ends up owning you. I don't know how that relates to this but anyway, what were we talking about?

 

And that gets at the beauty of "Fight Club." The strong anti-consumerist message should be heeded (though not the radical terrorist crap). Life isn't about what kind of car you drive, how big your house is, how expensive your furniture is, etc. It's simply about being satisfied with what you are doing (easier said than done, I know a lot of people hate their jobs and the things they buy are a sort of escapism). Nobody is made happy by driving a Lexus. They'd be just as happy with a Pontiac. Maybe that's the UAW Toledo in me, but I've always felt that way. People who get satisfaction from expensive consumer goods are using them as escapism from something else. They are coping mechanisms or an attempt to appear like you've jumped up on the social ladder. f$&k the social ladder and everyone who cares about it. It's pointless.

 

It's painfully clear that American society is incredibly shallow and vain. Most people buy things not because they themselves want them, but so they can impress other people. I'm sorry, but that's no way to live life- constantly seeking the approval of others. And it's not limited to consumer goods anymore. People are now trying to buy beauty. Look at all the plastic surgery, fake tanning, HGH/steroids, etc. These are not the signs of a healthy, confident society. These are the signs of an insecure, highly judgmental society on the brink of self-destruction.

 

My philosophy has always been drive a Ford, live in an old house, buy crappy furniture, and don't worry about the "latest and greatest" in technology. In the end, none of it really matters.

 

I knew you would come in here :)

 

I want wealth. Mostly to travel. Experience new things.

 

Americans are depressed and full of status anxiety. I think that's why we spend spend spend. We use 25 percent of the world's energy but we consume half of the world's cocaine.

It's amazing how the strawmen start falling when we veer off-topic...

 

The debate of "to be socialist or not to be socialist" is what a lot of economic issues come down to, if not all of them.  Your take on socialism is likely to determine whether you see payday lenders as a problem or a solution.

IMO if you want to learn about the ridiculousness of consumer culture, there's no better place to learn about it than Manhattan.

 

Having lived in Beverly Hills, I disagree with you on that one, though manhattan would be a close 2nd.  :)

 

I have a little story from right here in Cleveland that shows how deeply rooted the consumer culture is here.  I currently work part time (full time gig has been delayed... dumb economy) and an employee was recently hired where I work.  He had just recently gotten out of a shelter and is now living in subsidized housing with a roommate.  After his first paycheck he helped pay all of his bills and then gave some money to support his child.  I knew he needed help and I lent him some money to bridge the gap until his next check because I knew he spent the first one responsibly.  Then the second check came (on Friday) and he came into work on Saturday with a brand new winter coat (in March!) and shiny new designer shoes.  Now his electricity has been turned off because he can't pay the bill and his phone has also been disconnected.  By Tuesday he was asking to borrow money again... a full week and a half before the next check.  Of course I told him I couldn't help him if he wasn't going to help himself by setting up a bank account and at least trying to save something.  He responded with "It's going to get spent just as fast whether I cash it at a bank or not."

 

The priorities of this man and people like him simply shocks me.  A culture of spend spend spend has been bred in this country and it's going to be very hard to change it.

^ Funny how I rarely see visibly struggling people at the thrift store, yet see them all the time at the mall.

on their cell phones

I was at a auto repair shop yesterday waiting on my father to drive him home since he was getting his truck worked on.  While I was waiting for about 20-25 minutes for him to set things up, I couldn't help but notice the Cash Advance store next door and the traffic that was patronizing this business within that time frame. 

 

Out of the 12 vehicles that pulled up, 9 had temporary license plates of which 6 were newer ('06 or newer) SUV's.

 

Just an observation!  I'm not saying it's right or wrong, but it amazes me to no end what people consider and value as priorities in life. 

Payday lenders drying up

New Ohio law sends them packing

http://news.cincinnati.com/article/20090518/BIZ01/905180344/1055/NEWS/Payday+lenders+drying+up

 

More than a third of Ohio's payday lending storefronts have been shuttered since new restrictions on short-term lending took effect six months ago, state officials said.

 

Payday lenders operated roughly 1,600 retail locations across Ohio before voters approved new restrictions. Now, payday lenders run just 960 storefronts. While industry operators bemoan their struggle to keep running their businesses, critics charge they are using loopholes in the state's regulations to continue lending at high interest rates.

 

INSIDE THE HIGHLY PROFITABLE AND SECRETIVE WORLD OF PAYDAY LENDERS

Nasty divorce proceedings between Jared Davis, the founder of Check ’n Go, and his wife Bridget reveal a salacious sideshow of rich people behaving badly.

https://www.cincinnatimagazine.com/article/inside-the-highly-profitable-and-secretive-world-of-payday-lenders/