BuckeyeBlog

I’m not sure how I missed this, but there was an amazing editorial at the Cleveland Plain Dealer on June 23 regarding payday lending that is so rich in irony that I have to comment, even it it’s over a week late.

The opening sentence reads: “Here’s a stunner: Payday lenders resorted to falsehoods in their desperate attempt to continue gouging Ohioans with 391 percent interest rates.” As I’ve documented a few times on this blog, the anti-lending forces (among whom the Plain Dealer’s editors took a leading role) were the ones who were giving completely inaccurate information about payday lending throughout the legislative quest to ban it. The idea that these lenders charged 391% interest rates, for instance, is completely false. They charged $15 per $100 borrowed — that’s an interest rate of 15%. Yes, their annual percentage rate (APR) may have approached 391%, but an APR is different from an interest rate. A note to the Plain Dealer editors — if you are going to slam a group for “resorting to falsehoods” then you might want to refrain from, you know, resorting to a falsehood in the same sentence.

Of course, that kind of sloppy editorializing is par for the course in this debate. The Plain Dealer has also said in the past that lenders make “grotesque profits,” which is a blatant falsehood. I say “blatant” because reading any academic literature about payday lending shows that this claim (and many others made about payday lenders by the anti-lending forces) has no basis in fact. I find it highly ironic that the Plain Dealer editors blast payday lenders for “falsehoods” when they themselves are among the leading purveyors of falsehoods during this debate.

Tags: Free Enterprise, Regulation

This entry was posted on Thursday, July 3rd, 2008 at 10:53 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.