Thursday, October 16, 2008

Vote NO on Ohio Issue 5

I got a call last week that was an automated phone message from Mike Huckabee saying to vote NO on Ohio issue 5.

The Issue

Voting NO on issue 5 means that you favor blocking a portion of a law (section 3 of H.B. 545) recently passed by the state legislature and signed into law by Governor Strickland which puts more restrictions on lending practices. This law mainly concerns the regulation of so called PDL (pay day loan) or short term lenders. The regulation would limit the maximum amount of a short term loan to $500, give the borrower at least 30 days to pay back the loan, and limit the interest rate to 28% APR. Under current regulations (H.B. 545 is not yet in effect), the maximum amount of a short term loan is $800, there is no minimum repayment period, and the interest rate can be substantially higher than 28% APR.

The people who are saying vote YES on issue 5 say that this would help to prevent these lenders from taking advantage of people who are in a bad situation. They also point that the loans that are being regulated are “unsecured” loans.

Huckabee gave two reasons for voting NO on issue 5:

1. The bill would cause jobs to be lost (the employees of the PDL businesses).
2. The bill would result in a loss of financial privacy.

The first reason reminds me of Jim Petro, Bob Taft, and Mike DeWine’s phone messages urging people to vote NO on the Ohio marriage amendment because it would result in a loss of jobs. How pathetic that was. Just because something creates jobs doesn’t necessarily make it good thing. We could all go around vandalizing businesses and homes, breaking their windows. This would create jobs for the businesses that make glass. We need to vote on principle, and let the economic consequences take care of themselves.

The second reason is, at least in principle, a valid reason for voting NO on issue 5. But whether or not this would in fact occur if this bill were to be made law is something that I have not fully studied. (H.B. 545 is a very long and complicated bill.) If this bill were to violate our privacy rights, then a NO vote would definitely be the right thing to do.

Other groups, such as Ohioans For Financial Freedom, have advocated against issue 5. They point out that these regulations unfairly single out PDLs, while credit card companies and other lenders could still charge excessive interest, late fees, and bank overdraft fees which have the same detrimental effect on the poor. Without PDLs, these poor people might resort to these other ways of borrowing money and might end up falling even further in debt.

Candidate for Ohio Attorney General Robert Owens is against this bill and so is the Ohio Christian Alliance.

But in this post, I want to set aside these reasons and focus on the merits of restricting lending practices from a biblical point of view. The idea of placing limits on terms of lending (especially to the poor) is contained in the Law of Moses. Such passages are Exodus 22:25, Leviticus 25:35-37, Deuteronomy 15:1-4, 23:19, and Nehemiah 5:1-13. These passages seem to be limited to “my people” or “thy brother” and not to “the foreigner”. This seems to indicate that God only intended for them to apply to the congregation of Israel, not universally. Even if you believe that these passages are to be carried over to the “my people” (Christians) of today (and I think they do--see Proverbs 28:8, Ezekiel 18:8, 13, 17), it would seem that they would apply only to believers and not advocating for a civil law. Therefore I would classify this as moral law only. Furthermore, the terms of these laws don’t really have anything to do with the regulations of H.B. 545. All authority in Heaven and on Earth now comes from Christ (Matthew 28:18). Whenever civil government goes beyond its proper biblical scope, it always fails and ultimately causes more harm than good.


We live in a free country and if someone wants to throw away their OWN money, this does not violate my rights in any way. Do not get involved in taking advantage of the poor yourself, but vote NO on Ohio issue 5 for the right reasons.



  2. The pay day loan sharks prey on the most vulnerable people and need to be regulated. A vote for Issue 5 will make sure they charge fair interest rates. Yes on Issue 5!

  3. The government has a moral obligation to step in when an industry like payday lending is hurting people and putting strains on our families, communities and our economy as a whole. Over 300,000 Ohioans are trapped in debt each year, which the product is designed to accomplish. This is not a good thing for our state! Vote yes on issue 5! It's imperative that we look out for one another and support fair and reasonable lending that doesn't take advantage of the poor!

  4. Darren, you're right, government shouldn't be involved in people's finances, but HB 545 is a done deal. The only question is whether or not Section 3 stays in the bill. (Section 3 repeals the original rules on payday lenders and implements new rules that would limit the interest rate to 28%.) Issue 5 has nothing to do with our basic freedom. HB 545 has already been approved and voting "yes" or "no" will make no difference with respect to "freedom" or "privacy." Please vote YES on Issue 5 to protect people from getting sucked in by the loan sharking business. Mike Huckabee obviously hasn't read the bill if he thinks Issue 5 will make an iota of difference in freedom or privacy concerns.

  5. Anonymous10:36 PM

    And when Payday lending leaves Ohio, where are people to go when they need a quick, emergency loan? By cutting these companies off at the knees WITHOUT first having a plan to replace it, is irresponsible. As people of God, and following the Law of Moses, it is the Churches who should take on that responsibility - and yet I don't hear any of the churches urging a "yes" vote volunteering to help out these people who then won't have a way out of needing a quick loan.

  6. A. Why can't these places stay open while only making a 28% profit on the people getting these loans?

    B. The other credit institutions also need these types of regulations but need to come from a federal mandate in order to work.

    C. The big lenders already screwed us over and themselves and then we had to bail them out. So obviously we can't simply let them do as they want, loose a little freedom so that we don't loose it all to the lenders and a drowning economy now.

    If they can afford to buy the names of the Quick and Loans Arena they can afford to give loans that don't ruin peoples lives.

  7. Susan has a great point. COAST and the payday lending industry has really been touting their opposition to the database. Let's be clear: 1) Issue 5 has nothing to do with the database - it will remain irrespective of the outcome of the election. 2) the database is meant to ensure that the payday industry complies with the law - that's a good thing and 3) the payday lenders have an unsecured database of their own with all kinds of information about you including landlord/tenant records, foreclosure records, bankruptcy records, checking account information, etc.

    The payday lending industry received their lovely exemption from Ohio's usury laws in 1996 and they've had a decade to experiment with the finances of hard working Ohioans. We've seen hundreds of thousands of Ohioans get trapped in debt, millions of dollars flow into the pockets of industry CEOs and it's now time to put a curb on predatory lending practices! Vote yes on issue 5!

  8. Anonymous3:41 PM

    Okay, So the payday lenders plan is to take advantage of poor people. Um... that is just silly. Would you loan money to someone who cannot pay you back? This is not about morality, it's about your own financial choice. What else is the government going to be able to decide for you? What you can wear, eat, buy?... I will use my money the best way I see not how THEY see. Thank you.

  9. Anonymous9:56 AM

    I work in the payday loan industry and their is no greater satisfaction in life than taking advantage of poor people with no place else to turn. I love charging people $75 on a $500 loan every two weeks. I make large profits and they always come back for more. Please vote to let me keep making huge profits and please vote for John McCain so I can get a tax break. I need a new Mercedes since the one I have is from 2006. Please don't vote against me because you are jealous of my profits, it is un-American.

  10. You know, most of you people scream at the government for not taking action on specific things - usually something that affects you. Then you complain when they try to protect you dumb idiots and scream that they are interfering in your free choice. With people as stupid as they are nowadays, you NEED the government to tell you what you can or cannot do.

  11. Anonymous1:38 AM

    I no longer reside in Ohio, but I still use (very rarely anymore) one of the payday loan services closeby to my parents as you cannot go in as a new client anymore to any of the PDL's here in PA.
    I have never had a problem with paying my PDL back and they know me quite well and have even worked with me on the extremely rare occation that I needed to. Granted, $15.00 for a two week loan is high, but it's not like anyone goes in there and doesn't know about the fee upfront. As well, $35.00 for an overdraft is 2x and then some.
    I can see how one can get into a cycle (unfortunately, that did happen to me once) where "flipping" may occur, and yes, it wasn't easy to get out of the cycle, but I managed to with some prudent spending.
    In essence, Ohioans should really think this over before voting "yes." What do you think is going to happen to the lenders? They'll go out of business and people will resort to desparate measures to make up a shortfall.

  12. I'm sort of pulled different directions regarding this issue. I do not feel as though the government should be involved in personal finances, but on the other hand these payday lending places have been doing this for years, it needs to stop.
    There are some VERY judge mental people out there regarding the type of person that would take out a loan of this sort. I am one of them. I work two jobs and go to school full time. I am going through a divorce and have been screwed over numerous times financially by my soon to be ex husband. I paid out $1200 last month in lawyers fees. I cannot quit school and pick up a third job because after 6 months of not being in school, those loans would become due. At this point, I could not finance a stick of gum. I had to take out three loans just to survive. Do you think I'm proud of this? Do you think I actually would ever tell anyone I know I do this. I'm surprised I have kept it a secret this long.
    I think that if these Payday companies were made to decrease the APR, and amount of time to pay them back, I could eventually breathe the free air. I don't want anyone to loose jobs, but on the other hand something has got to give. There are hard working folks out there like me that are just trying to make it and we have very few options. I really think the Pay Day industry needs to revamp how they do things.

    If anyone has any ideas as far as what to do in my situation, I'm open. (I'm really not being sarcastic) As I said, work two jobs, go to school full time, and donate plasma once a week. I can't borrow money from anyone, cannot borrow against my 401 k yet. It wasn't the best idea to go to a place like that initially, but now I'm in this horrible web and have no clue how to get out. Anyone out there make it out of this mess in one piece? Thanks.

  13. If you don't like the percent they charge then don't use them. There is a reason big banks don't give out 1 week loans to risky people, because its expensive to loan money to risky people.

  14. Anonymous8:40 PM

    to william
    pdl places can survive on 28% apr. that's not the problem. it's limiting people to one company four times a year and the customer having to pay for a financial literacy class that could cost up to $250. if we give one person a loan for $100 and it cost that person $1.08 to take it out, that would be great for the customer. now say that one person decides not to pay us back, it would take 100 more loans that don't default to make up the money we lost on that one loan? does that sound fair to you? the government database will pout people's financial info into a computer system that will be accesible by every loan company to make sure that you are only doing one loan at a time. how many goveernment databases have been hacked in the last year? our information that we keep in our computers only stay at the store that you do business with. we do not share info with anybody else unless you go to another store and we transfer your info with you. loans have to approved by limits that are set up to each individual. you can only borrow up to one week's worth of pay. we don't want you to go into debt. we are here to help you stay out of debt, but only if we are not abused.