Cash America International has been very busy. The cash advance company recently announced the purchase of CashNetUSA, as it looks to expand into the world of online payday loans. 

Furthermore, the firm revealed earnings expectations for the second quarter that ended June 30 - they'll exceed the company's previously released guidance and be higher than security analysts' published estimates. The basis for this news? Greater revenue growth and profit margins from the retail disposition of merchandise; along with an increase in service charges on pawn loans and online cash loans.

Cash America had previously reported in its earnings release for the first quarter of 2006 that it expected second quarter 2006 earnings per share to be between 26 cents and 28 cents. But the updated numbers for the second quarter is 30 to 31 cents per share, up from 23 cents per share in the second quarter of 2005.

The future looks solid for this cash advance payday loan company. 

Cash America International has been making money through payday loans - despite pigeon-holing itself as a brick-and-mortar business. But all of that is about to change.

The company will purchase CashNetUSA, for a cool $35 million, in order to move swiftly into the online payday loan world. Cash America is already the largest provider of pawn loans in Texas, with a network of 717 lending locations that offer cash advances in 20 states - but has been looking to expand into the online cash advance industy.

Mission accomplished. Thus far, the payday loan company has largely been depending on its stores to offer payday loans under the brand names “Cash America Payday Advance” and “Cashland.” It also offers check-cashing services under the brand name “Mr. Payroll.”

The acquisition of privately held CashNetUSA will help change that.

“By expanding our product delivery platform to include Internet access, we believe that we are positioned to serve a new customer segment beyond the reach of our current brick-and-mortar lending locations,” CEO Daniel R. Feehan said in a statement. “This will allow us to satisfy customers who seek short-term payday advances instead of higher-cost alternatives to meet their credit needs with ease and convenience.”

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Two lawmakers from Chicago's south suburbs will be instrumental in helping shepherd the rules proposed by Illinois Gov. Rod Blagojevich to toughen payday loan practices.

The regulations would protect consumers from exorbitant fees and unlawful collection practices by lenders trying to circumvent the Payday Loan Reform Act.

State Sen. Maggie Crotty (a Democrat from Oak Forest) and State Rep. David Miller (a Democrat from Dolton) are members of the Joint Committee on Administrative Rules, which will meet Tuesday and vote on the rules that have been subject to a 45-day comment period.

A super majority of votes, or eight members of the 12-member, bipartisan committee, composed of equal numbers of senators and representatives, is needed to stop the rules from taking effect. Miller is looking for fairness and a sense of standardization within the payday industry, in order to rid Illinois of the bad seeds. Crotty agreed.

"When people (issue) loans, they can see how much that person is making. They are lending money to people who cannot make those kinds of payments," Crotty said.

• The Payday Loan Reform Act was drafted to apply to loans that are made for 120 days or less. Most payday advances are made for 15 days or less.
• Miller was the chief sponsor of the Payday Loan Reform Act, which took effect last year. After its passage, average fees decreased 68 percent.
• Before the passage of the act, $320 payday loans would cost approximately $144 in fees.
• The same loan now only costs $47, according to data from the Woodstock Institute, a Chicago-based non-profit organization promoting reinvestment and economic development in lower-income and minority communities.

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As previousy reported, The Bend Bulletin doesn't hide its feelings in stating the need for payday loan reform in Oregon. A recent letter to the editor follows up on recent cash advance news:

On June 21, officials in Bend and Oregon City cast unanimous votes in favor of the payday advance reform ordinance. The local ordinance offers consumers immediate protection by establishing the right to a payment plan and ending interest-only payments on back-to-back rollovers …

However, lawmakers delayed the new law for 15 months. Payday loan lenders only took a few weeks to adjust. They have developed a new type of loan that allows them to get around the 36 percent annual cap. They will continue to profit by charging people short on money triple-digit interest. Communities around Oregon need to fight this greed.

More payday loan reform is still needed.

Elsewhere in the paper, the following chart is listed. It shows - in detail - how a supposedly cheap payday loan can add up:

The Oregonian has many views on payday loans. We've covered a few of them already, but the latest from the newspaper deals with certain loopholes in recent cash advance legislation.

This spring, the Oregon Legislature cracked down on payday loan stores that drag low-income families deeper into debt. The practice of charging steep fees was outlawed, along with annual interest rates that exceed 500 percent, on short-term loans.

The intent was to keep the payday loan industry from taking unfair advantage of customers' desperation or ignorance. And it was greatly appreciated, an important public service was accomplished. However, legislatures left a big loophole in their legislation, as The Oregonian's Bill Graves reported last Sunday. The new law, which takes effect next July, applies only to payday cash advance lenders.

It doesn't cover conventional lenders, who are licensed to make longer-term loans that are paid back in installments. It also doesn't cover car-title lenders.

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Illinois Governor, Rod Blagojevich, is serious about ridding his state of payday loans. However, after passing new consumer protections on the cash advances throughout the state, he witessed an unfortunate consequence:

• The number of payday loans went down, but the number of low-dollar "installment" loans charging high interest went up.

Now, the governor is fighting back. Blagojevich is using his rule-making power to extend the aforementioned protections to high-interest installment lending. An editorial in The Southern Illinoisan says this is "a good idea." But refers to Blagojevich's quote about payday loan lending as "legal form of loan-sharking" as a bit over-the-top.

A time and place for payday loans: There are some sharks out there, for sure, but payday advances fill a real need for consumers who live paycheck-to-paycheck. What if a car breaks down? It will cost $100 to fix and payday is a week away. The bank won't make a loan that small, and you don't qualify for a credit card. But the payday loan lender will lend you $100 for $115.50, payable in 13 days.

The problem comes when borrowers make a habit of rolling over payday loans at higher and higher interest. With that in mind, the Illinois legislature passed limits on fees - the size of loans and the number of roll-overs allowed. Borrowers who can't pay up when they hit the rollover limit can pay off the loan over time without additional interest. And lenders can't threaten debtors with jail.

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What's wrong with this payday loan picture? 

Dennis Bailey - the Arkansas payday advance lender who was fined $1.3 million recently - is still doing business in the state. Despite being ordered to shut down 14 stores, Bailey has yet to do so because the state needs a court order to enact such a punishment on the pay day loan business.

The Arkansas Board of Collection Agencies says Bailey is operating businesses without a license that have been cashing checks for fees and making faxless payday loans in violation of state law. The board ordered the 14 stores closed immediately … but officials just learned the firms are still operating. A court order is required because the stores perform services other than just payday loan lending.

A lawyer for Bailey says the board decision is being appealed.

For some companies, the payday loan business is alive and well. Take World Acceptance.

For 25 years, the firm has been giving small loans/payday advances to residents of Southern states who don't have access to credit. It's been a very successful formula: World Acceptance breezed through this decade's early economic slump with double-digit revenue and earnings growth.

"It's not that complicated," said Sandy McLean, the company's chief executive. "Our only earnings asset is our loan portfolio."

The payday loan company runs about 620 branch offices in 11 states. Its largest market, Texas, accounts for 20% of its loan portfolio. Now, though, it's looking to move even farther south … into Mexico.

Since September the firm has opened five offices in Juarez. World Acceptance plans to have 10 to 15 offices in Mexico by the end of March.

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PLIWatch.org, an independent provider of payday loan and cash advance news similar to the Times, is seeking interviewees for its newest media feature — podcasts.

Short for Payday Loan Industry Watch, the site is looking for feedback from a broad spectrum of people involved in this controversial business. Its interviews, which will discuss a variety of topics related to the fast cash advance and payday loan industries, are conducted at no cost to those being interviewed.

Anyone involved with the business is invited to inquire about participating, including:

• Lead generation company staff members that serve the payday advance loan industry
• Affiliate marketing company staff members that specialize in relationships with companies offering pay day loans
• Payday loan company owners or designated representatives
• Consumer advocates with a strong position on the industry
• Industry spokespeople and lobbyistsIndividual customers
• Research groups
• Government officials and policymakers dealing with these controversial payday loan online issues on a legislative level

The podcast interviews will ensure that interviewees can speak freely and at length, rather than being restricted to short sound bytes. The site will do everything in its power to accommodate those being interviewed and will conducted them telephone, requiring less than an hour of time.

Editing may be performed to eliminate dead air and verbal stumbles, but all content in the payday cash loan interviews will be left unadulterated. PLIWatch.org will host and maintain the podcast.

Steve Hanson is the president of Oak Brook Financial, the largest network of payday loan stores in Oregon.

As such, he takes extreme offense to what he refers to as the "one-sided and unjust assault on both providers and users of short-term loans" by the editorial board of The Oregonian. The paper has recently written two attacks on the business of payday loans. Here's a sampling of what else Hanson had to say:

The articles cite anecdotes about the plights of selected borrowers who apparently had nowhere to turn but short-term lenders and were victimized by the transactions they entered into. The suggestion is that all consumers should have a right to borrow money when they need it and that somebody ought to be there to loan it.The consumer, cheap payday loan industry agrees.

However, certain loan products are much more costly to provide than others. Legislating maximum fees and interest at a level that is below lenders' costs of providing targeted short-term loan solutions will cause those loans to disappear.

Unless it is amended, the recent statute passed by the Oregon Legislature has placed limits on payday advance lenders that will cut their revenues by more than 70 percent. No business can survive such a reduction. Unless the statute can be significantly changed, it will quite effectively abolish payday loans.

And if the Legislature extends those same limitations to all sub-prime consumer loans, then all short-term sub-prime loans will be eradicated. Eliminating the sources of emergency short-term cash would effectively end the right of some consumers to borrow money.

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