The payday loan segment had a rough Tuesday, losing two major battles in Ohio and Arizona that industry leaders say will have national repercussions.

In the U.S. House and Senate, the rent-to-own industry did OK yesterday - meaning it could have been much worse. Democrats did not reach, at least for now, the 60 Senate seats necessary for their hoped-for super majority and Republicans managed to hold House losses below worst case estimates.

Three Senate races remain too close to call early Wednesday in Oregon, Alaska and Georgia. The Minnesota Senate race was called this morning for incumbent Republican Norm Coleman who was running against comedian Al Franken.

The payday loan segment had a rough Tuesday, losing two major battles in Ohio and Arizona that industry leaders say will have national repercussions. Votes to repeal a portion of Ohio's new short-term loan statute that caps payday loan rates fell short. Cash America said this morning that it would begin closing stores immediately (see details below).

The industry supported ballot initiative in Arizona to extend the current cash advance statute beyond its expiration date of July 1, 2010 was also unsuccessful.

Joseph Coleman, Chairman of the Financial Service Centers of America (FiSCA) said in a letter to members in October, "What happens on Election Day in Ohio and Arizona will unquestionably impact the future of the payday industry." Coleman added, "A defeat in either or both states potentially could have a negative ripple effect on other states or even at the federal level."

President Elect Obama was the only candidate to publicly call for federal legislation capping payday loan interest rates at 36% (see story).

CORRECTION 11-05-08 11:30 am EST: We previously reported that Ohio voters approved the building of casinos. They did not. The measure was defeated. The article has been corrected. In a bit of twisted logic, voters in Arkansas approved the creation of a lottery just months after the state's Attorney General began shutting down payday loan companies. There was one glimmer of hope for the Northeast however - Voters in Maine repealed new taxes on beer. Party on ayuh.

There are three rent-to-own industry legislative conferences planned for early 2009. The trade groups Nationwide Rental Coalition (NRC) and the Association of Progressive Rental Organizations (APRO), each representing over 400 companies, will host separate legislative conferences in April. That same month, Aaron's will send franchisees and executives to The Hill during the company's 2009 National Manager's Meeting (see story).

Strategies for coordinating efforts between the various trade groups are in the early stages but sources say that joint planning sessions will be held soon. The presumed lame-duck session will offer one last opportunity for action before the new Congress convenes in January.

Details
Incumbent Mary Landrieu, perennial sponsor of the Consumer Rental Purchase Agreement Act, was elected to a third term in the Senate, defeating Democrat turned Republican challenger John Kennedy 52.1% to 45.8%. Landrieu has introduced the Rental Purchase Act in the last four congressional sessions. Although unable to move the Act out of committee, insiders are looking to Landrieu to re-introduce the bill in early 2009.

Senator Landrieu told RTO Online this summer, "Unfortunately, the bill is bottled up in the Senate Banking Committee, which has been slow to move legislation during the 110th Congress as it focuses much of its time and attention on the continued fallout of the sub-prime mortgage crisis."

Democrats failed to win a 60 seat super-majority in the Senate thanks to wins by Norm Coleman in Minnesota, Republican Leader Mitch McConnell in Kentucky, Roger Wicker in Mississippi and Saxby Chambliss in Georgia (NOTE: Despite election night reports, Chambliss failed to get 50% of the vote and will have a runoff in December.). Wicker co-sponsored the Rental Purchase Agreement Act before moving to the Senate in January when he was appointed to replace the retiring Trent Lott by Mississippi governor Haley Barbour (see story).

Cash America announced it will close a third of it Ohio locations. "Sadly, this outcome will force us to close about 43 of our Cashland lending locations, leaving about 150 of our hard-working coworkers without jobs," said Daniel R. Feehan, president and CEO of Cash America.

Feehan said the locations that remain open will offer alternative services including short-term unsecured loans governed by a different statute.

"This was a hard fought loss for the industry," said Feehan. "As an industry, we did everything we could through efforts like the 'Vote NO on Issue 5' campaign to avoid loss of jobs and credit options, as well as to prevent negative economic impacts in the state through the loss of jobs and the closing of many places of business."

Calling for the repeal of a portion of Ohio HB 545 was necessary, said Feehan. The bill calls for an annual rate cap of 28 percent, which isn't economically feasible for store front providers of small short-term loans to customers. The new law reduces the fee charged on a $100 two week loan to $1.08 (less than 10 cents a day). "There is no way to sustain a viable store front business by offering small, short-term unsecured consumer credit at this rate," said Feehan.

"As a Company committed to helping people, we will do our best to continue doing business in Ohio by offering other products and services. We assured our coworkers in Ohio that we would do everything we could to save their jobs," said Feehan.