Here is point by point rebuttal to the AJC article. If the AJC were held to the same audit and honesty standards that our industry is held to, by law, they would be out of business.
The AJC should be ashamed of such sloppy and outright untruths in their reporting and opinions. It would seem they have an obligation to the community for honesty and truth. Sadly, that is not the case.
ATLANTA JOURNAL CONSTITUTION
OUR OPINIONS: Entitlement groans
Legislators surely know that the title loan industry gives them money because it expects favorable laws
Tuesday, July 19, 2005
Someone ought to break the news to state Rep. James Mills (R-Gainesville) that there's no tooth fairy, reindeer can't really fly and industries don't donate hundreds of thousands of dollars to politicians without seeking something in return.
Let's talk about tooth fairies, reindeer and the truth about political contributions. In this country, so far, we have the right to contribute to those who we believe best represent those things that we also believe. It is not a crime. It is a right! Certainly, the parent company of the AJC and the majority stockholders believe it is a right. Go here and see what the hypocrites at the AJC contributed to politicians. How about almost $700,000 to those who vote on issues that directly affect their communication companies? Do your own search and find more about the Cox family and their contributions. Now, why is it okay for the AJC to make these contributions, but a travesty for our industry to do so??
In the case of the title pawn industry, that something is a "no" vote on bills to rein in their abusive loan practices.
So, exactly what Is the reason for massive political contributions by Cox Enterprises, their employees and family members to legislators?
Backed by the borrower's car, the typical title loan has a triple-digit annual interest rate, requires repayment within one month and is made for much less than the value of the vehicle. Lenders don't fret over whether the borrower has the ability to repay the loan since the car is their security.
A little checking on the part of the AJC would show the transaction is a pawn -- not a loan. A pawn transaction does not require the borrower to repay at all. That's the law. As a practical matter, most every title pawn operator we know certainly verifies the employment and proof of income before entering into a pawn transaction and they have no desire to have the borrowers vehicle. If the borrower does not wish to pay off the transaction after 30 days, most title loan operators will gladly extend the loan for more time.
A little more checking by the AJC with the regulators would show that the title loan industry has virtually no complaints from consumers for the service they provide. But, they did not report this fact! More selective reporting on the part of the honorable folks at the AJC.
The House and Senate failed to act on three bills that would have protected consumers this past session, agreeing only to hold hearings this summer and reconsider the bills next year.
As chairman of the House Banking Committee, Mills insists his vote on title loan legislation will not be swayed by the $10,000 in contributions the lenders bestowed on him after he spoke at their June convention. This year, the industry has given $120,000 to politicians, but Mills denies the money plays a role in the Legislature's decisions.
"Goodness, no," said Mills at a hearing last week on bills that would cap annual interest rates on title loans at 60 percent and require title lenders who repossess borrowers' cars to refund any cash left over after the vehicles are sold.
Surely, representative Mills would be no more influenced by $120,000 than those who legislate communications issues would be in the case of almost $700,000 in contributions by the AJC's parent!
Of the two dozen states where title pawn loans remain legal, Georgia is alone in permitting lenders to retain all the proceeds from the sale of a repossessed car, even if the sale nets thousands more than the value of the loan. That suggests all those generous campaign contributions the industry has made did not go unnoticed or unappreciated by legislators.
This is just an out-and-out untrue statement. There are other jurisdictions that do not require repayment of proceeds from a vehicle sale. A little real journalistic effort and the AJC would know which states do not require repayment.
What has gone unnoticed is the financial devastation that these loans wreak on Georgia's unsophisticated borrowers, including many young servicemen and women stationed at Georgia military bases.
First, maybe "financial devastation" has gone unnoticed because it is not a problem. In fact, many of those testifying in the recent hearings stated the industry helped them avoid "financial devastation" when they had nowhere else to turn. And, second, a recent study of payday lending activity indicated that military personnel represent no more than three percent of the total payday loans outstanding. We know that for every title loan outstanding, there are at least three to four payday loans (except, of course, in Georgia). By logic, less than one percent of the payday loans made are to military personnel. More untruths and unmitigated exaggerations by the AJC's insinuation.
It's hard to believe that any legislator of conscience could defend loans that carry annual interest rates as high as 300 percent and strand borrowers without a car, endangering their livelihoods, but somehow Mills does.
More untrue fact reporting by the AJC! The Georgia pawn statute calls for the borrower to pay at a rate of 25% a month for the first 90 days and then 12.5% for any additional months. Now, if someone did happen to borrow for an entire year the math says the APR is 187.5% -- not 300%. Wrong again, AJC. The AJC should know that title loans are short term loans and the borrower typically borrows for one or two months. The AJC should also know that many companies do not charge anywhere close to the 25% rate due to market forces and many offer the first month at 0%! Did the AJC bother to report that fact? Wrong, wrong, wrong, AJC.
If the AJC wishes to talk about "conscience," how about paying someone at an earnings rate that would make the minimum wage look like winning the lottery. Ever wonder what the AJC pays the poor and children to deliver their papers? No benefits, no nothing except pennies a paper at all hours of the day and night. This has been going on for generations without a concern for "their conscience." Again, very selective concerns by the AJC. Perhaps we need legislation that will protect these people. How does that sit with your conscience AJC? Would you support such a change?
"They're high-risk loans that no one else wants to make," he said. "Where else would these people go to get money to buy groceries or pay the light bill?"
State Representative Mills sure got that "high risk" part right. Maybe the AJC would like to come in and check the records of those borrowers who run up car title loans with multiple companies along with credit card loans, jewelry stores loans and other loans and then head straight to the bankruptcy court to have their debts wiped away by the bankruptcy judge. Or, how about the borrowers who take out loans and then strip the vehicle for parts or hide the vehicle or destroy the vehicle. The AJC did not report this. More selective reporting by the honorable folks at the AJC.
Well, Rep. Mills, here's a few suggestions. Rather than assuming a title loan that creates a treadmill of debt, borrowers could negotiate a payment plan with the creditor, request an advance on their pay from their boss, join a credit union so they're eligible for low-interest loans, get overdraft protection for their checks or try to obtain a line of credit.
That's just what we need. The most honorable folks at the AJC dispensing credit counseling advise. This is one area we can agree with the AJC. Certainly, the borrowers should try all of the options above. Perhaps, the AJC wishes for legislation that would require anyone entering into any loan transaction, by law, to take these steps.
We do not know of a single instance where a borrower has been forced into a title pawn transaction without their knowledge. By law, a title lender MUST disclose the truth about the title loan just like banks and other regulated financial institutions. This is clearly more than the AJC must comply with in their reporting. Title pawn operators are like any other regulated financial institution, they depend on good customer relations for the success of their business. In addition to mandated disclosure requirements, reputable companies will go overboard to be sure the customer fully understands the transaction. They have no desire to reposes a customer's vehicle as a result of a misunderstanding (or any other reason, for that matter). So, there should be no reason for a borrower NOT to know the terms of the transaction. It is fully and truthfully disclosed by law and by good business practices. Again, we only wish the same applied to the AJC!
Of course, all those options differ from title pawns in one significant way: They don't make the lenders rich enough to buy themselves a whole lot of friends and defenders in the Georgia General Assembly.
And just what do massive contributions at the AJC parent buy??
> EQUAL TIME: For another perspective on this issue, see the next page, A13
EQUAL TIME: Title lenders fill a void in marketplace
John H. Thomas - For the Journal-Constitution
Tuesday, July 19, 2005
As reported in the Gainesville Times recently, a legislative committee holding hearings on whether to cut legally allowable title pawn interest rates by fivefold heard from satisfied customers happy to pay the admittedly high rates.
"My phone was cut off, I had no food, and my gas was cut off," one customer testified. "I took my title there and borrowed $250. I don't know what I would have done without it."
Another customer has three children, one of them critically ill. She works two jobs.
"When you can't pay your [utility] bill, they charge you a huge amount just to reconnect you. The title pawn companies have saved us repeatedly," she said.
Others told of how title pawn companies advanced the cash on their car titles, which allowed them to save their homes from foreclosure by the bank.
While Georgia already has the lowest workable title pawn rates in the United States, state Rep. Mary M. Oliver (D-Decatur) for a third time assaulted the industry with a bill that would effectively eliminate title pawns in Georgia. Both of her previous attempts failed to pass. Now here she goes again seeking to shut down a perfectly legal industry that provides a needed service for many Georgians.
Oliver wants to see a repeat of Florida and Kentucky, where rates were cut so severely the industry shut down. What's next? Government loans to Georgia's credit-challenged consumers?
Private business can fill marketplace needs --- especially if government regulation were removed, letting the natural competitive marketplace forces prevail. Change Georgia's antiquated lending laws that provide government protection to a select few. Allow an open-market system. Traditional lenders would move quickly to compete and the people of Georgia would benefit. Let us not forget one of the premises of our Founding Fathers --- less government is the best government.
> John H. Thomas is a lobbyist for the United Pawn Council of Georgia.
This column is solicited to provide another viewpoint to an AJC editorial published today.