Common Sense from Rep. Huffman
Tuesday, August 26th, 2008 By Marc Kilmer
While you would be hard-pressed to find “fair and balanced” (to borrow a phrase) coverage of the payday lending referendum in the Columbus Dispatch, the Dayton Daily News, or other large papers in Ohio, there are some papers who have actually been presenting the facts — or at least quoting those who have the facts.
In today’s Delphos Herald, Rep. Matt Huffman is quoted extensively on why he opposed the payday lending ban. Rep. Huffman should be applauded for not only grasping the facts of this issue but for having the political backbone to oppose a law that was supported overwhelmingly by his colleagues. Here’s what Rep. Huffman had to say about why he opposed this ban:
I voted against it because I think, in some instances, it’s a product people want to have available. I don’t see a lot of difference between these loans and what happens with credit cards where people get a $5,000 line of credit and pretty soon, they’re maxed out and at 19 percent, can never pay it back. Let’s be clear: this is a bad option but it may, at times, be folks’ only option. If they need to make a child support payment or they have a medical bill or some doctor says you have to have $150 up front before he’ll see you. There are different cases where this is appropriate and most people pay it back on payday.
It’s misleading to say it’s at a 391 percent interest rate. It’s similar to going to an ATM at a bank other than your own to take out $100 and they charge you $2. Well, that’s one day’s worth of interest and you can say that’s extremely high but it’s really just a question of what somebody is willing to pay for a service. That’s why it’s confusing to say it’s 391 percent and that’s only one example. That’s why they had to take that out of the ballot language.
The people who want to keep this in business make a lot of money and don’t want it to sound so bad. This is a really bad financial product. It’s a bad thing for people to do but it’s a lot worse to pay $4 for a .12 ounce drink at the movie theater when you can buy it for $.35 wholesale, for example. The state rips people off more with the lottery than payday lenders do with these loans.
Tags: Economic Freedom
