In short, I’ve asked you to vote “NO” on Issue 6 opposing a casino; I’m asking you to vote “YES” on Issue 5 to place caps or limits on short-term and “emergency” loan interest rates.

There’s a lot of hoopla out there opposing Issue 5. Even the Ohio chamber of Commerce – the defender of the free market economy and booster of all business – opposes Issue 5 because they fear that it will unduly burden payday loan centers, check-cashing companies and “rent-a-center” types of businesses. That’s the job of the Chamber of Commerce: defend business against government intrusion, boost the economy through stimulation of businesses, and support all business concerns. It is not the job of the Chamber of Commerce to protect families and children and keep unscrupulous people from bilking Ohio families of their hard-earned cash. No – that’s our job.

Here’s what’s at stake.

Most people take their paycheck and deposit it in their checking account on payday. Some will take some cash out at the time they deposit the majority of their paycheck. But, there is a growing segment of the population that cashes their paycheck because they live “hand-to-mouth” and “paycheck to paycheck.” Most banks charge little or nothing to deposit your paycheck in your account; most banks charge little or nothing when you take out some of your own cash. However, most banks limit the amount you can take out when you deposit funds, or require a waiting period for the paycheck to draw on the employer’s bank before letting you, the depositor, withdraw all of the funds. It’s a safeguard for the bank, the employer, and for you, the depositor. Since this growing segment of the population requires all of their cash up-front, they go to a “check-cashing” company. The check-cashing company charges a hefty fee for this service. That’s how they make their money, and they make huge profits week after week, year after year for cashing paychecks.

Now enters the more odious player: the payday loan company. A person in need of emergency funds can go to a payday loan company and take out a loan for additional cash – beyond their normal paycheck – by guaranteeing that they will surrender their future check(s) over the next 2 weeks. That may be an oversimplification; these payday lenders might choose to extend the loan period or opt for more elaborate re-payment schedules, but this part of the loan stays true to form: if a person is desperate enough for a quick loan from someone other than a bank, the lender knows they’ve got an “easy mark”, and adds a walloping $15 per $100 borrowed as a flat fee. Now, not only does the borrower owe their next paycheck, they owe the entire 15% up front.

At first, you may wonder what’s wrong with that picture. Don’t most credit card companies charge at least that amount? The difference is in the “flat fee” of the payday loan company versus “annual interest rate” of the credit card company. If you put money on your credit card, you’d owe (to keep it simple) 15% annually; if you applied the same “flat fee” structure the payday loan companies charge, you’re looking at the equivalent of about 390% annual interest. How does that work? Banks and credit card companies give you time to repay, and only assess interest on money you have outstanding; if you pay it back quickly, you owe less interest, and may owe nothing at all if you pay it back quick enough. The payday loan puts the 15% fee up front – you owe that fee even if you turned around and paid the loan back an hour later.

It sounds like something right out of the movies! A desperate gambling addict has a “sure-bet” on a horse at the track and he seeks out the neighborhood’s loan shark for a quick loan. Money changes hands, the horse may win or lose, but when the borrower comes to pay back the loan, the loan shark charges a huge fee for the loan, and the borrower ends up deeper in debt to the loan shark, unable to pay the money back fast enough to stay ahead of the interest. In the movies, the borrower may end up with missing or broken body parts as a reminder to pay what he owes. Sure – that’s a bit dramatic, but you have to understand the concept of a predatory lender: someone who has the cash you need, and will loan it to you freely with a smile on their face, because they know they’re going to bilk you of far more than the little loan they extended to you.

The banking industry is regulated; the credit card industry is regulated; but the payday loan industry is not regulated.

Well – that’s not quite true. In reality, our Ohio lawmakers wisely passed Bill 545 earlier this year to cap these payday loans at 28% - still a HUGE interest rate compared to banks and credit cards. The Bill also gives borrowers 30 days to repay the loan instead of 2 weeks, reducing the strain on their cash flow and ability to get ahead. The lawmakers also mercifully reduced the total that can be borrowed to only $500 per loan. Our “YES” vote on November 4 would allow the law to take effect; a “no” vote would repeal this vitally important law.

Issue 5 must pass. I’m not suggesting we hurt anyone’s business or give the government willful access to legislate all businesses in an unfair manner. I’m suggesting this kind of “loan-shark” payday loan scheme be curtailed and carefully watched and regulated.

Why? Well – not for me. I cannot envision a scenario in which I would go to a check-cashing business or a “rent-a-center” type of business to take out a loan and pay a flat fee or an enormously high interest rate. I’ll visit my bank and trust their judgment and the government’s careful regulation of the banking industry; and I’ll pay the 6% or 12% or 18% annual interest they charge, depending on the type of loan or line of credit I receive.

I’m concerned about my friends and neighbors and members of our area churches who live paycheck to paycheck and need additional cash from time to time and, because of the challenges they face economically, go to such a payday loan business. Just because they’re in trouble doesn’t mean the loan “shark” should take advantage of them. Just because they have no other options for quick, emergency loans, doesn’t mean a predatory lender should be able to bilk them out of their hard-earned cash. Just because the vast majority of these borrowers are impoverished, doesn’t mean that no one should care enough to look out for them, and allow these payday lenders to charge any fee they choose.

The lottery and the casino are aimed at poor people looking for a “get-rich quick” remedy. These gambling tricks get foisted on poor people who want a chance at wealth, and get foisted on rich people with the promise that “millions of dollars will flow into education, the economy, and area businesses.” We vote in these insidious, money-grabbing, widow-making, house-stealing get-rich quick schemes, call them "voluntary taxes," and our poor neighbors pay the bill with their savings, their mortgage payments, and their food money.

On top of that, we have allowed the loan “sharks” to wreak further havoc on the poor and economically-challenged of our community by allowing them to charge exorbitant fees on these payday loans. It’s as if these predatory lenders are saying “Hit ‘em while they’re down. Get ‘em for all they’re worth. We don’t have to worry, they’re just poor people, and the rich people won’t care – because they won’t know.”

Well – we know now! These loan companies are not good for anyone except themselves. Our Ohio legislation was right to cap these loans and reduce the horrors these types of loans can afflict on people who don’t always know better, and can’t always understand enough to defend themselves. It’s up to us to help defend the ones who can’t defend themselves. If we don't take care of it now, we will most certainly take care of it later in the form of higher taxes to fund more social welfare programs, and in the form of our area churches spending more of our evangelism dollars to help the homeless and hungry. We're pleased to help those in need; but we ought to work hard to remove the temptations that cause their economic downfall in the first place!

I urge you to vote “YES” on Issue 5 and limit the amount of money the payday lenders can charge for these quick, emergency loans. I also continue to urge you to vote “NO” on Issue 6 blocking the casino from entering Ohio, as I mentioned in an earlier blog.

Thanks for your attention and your heart for people.

Pastor Marty