Payday lending reform bill ready to advance in Ohio Senate

Payday lending reform bill ready to advance in Ohio Senate

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Payday lending reform bill ready to advance in Ohio Senate

State senators apparently struck a deal on a contentious payday lending reform bill but not everyone is happy: consumer advocates are cheering but industry insiders are jeering.

Nick Bourke, director of consumer finance for The Pew Charitable Trusts, told senators that the new bill “will achieve true payday loan reform and save working Ohioans tens of millions of dollars per year — and preserve access to credit.”

Members of the Ohio Consumer Lenders Association complained that they were cut out of negotiations on the latest version of the bill and they alleged that Pew is colluding with Dayton-based Wright-Patt Credit Union to put payday lenders out of business.

Cheney Pruett, founder of CashMax, which has 58 stores in Ohio, called the changes to the bill “death knells” for the industry.

Substitute House Bill 123 is expected to clear the Senate Finance Committee and then get a full floor vote on Tuesday. It’ll still need final approval from the House since the Senate made changes to the legislation.

The latest version calls for:

• limiting loans to a maximum term of 12-months and principal of $1,000;

• restricting interest and fees on a loan to no more than 60 percent of the principal;

• closing a loophole used by lenders in the past;

• limiting repayment schedules on loans of more than 90 days to 7-percent of the borrower’s monthly net income.

It would also prohibit harassing phone calls, limit on-site check cashing fees to $10, and clarify that a third-party can pay off the loan. Borrowers could also rescind the loan within 72 hours, up from the current 24 hour window.

Related: Big money, political muscle on display in payday lending clash

The fight over House Bill 123 has been fierce and 10 years in the making. In 2008, lawmakers approved strict limits on how much payday lenders could charge consumers. Ohio voters confirmed the limits in a referendum vote.

Immediately, lenders started issuing loans under different sections of Ohio law. Pew research shows that Ohio customers are paying annual percentage rates of nearly 600 percent — the highest in the country.

State Reps. Kyle Koehler, R-Springfield and Michael Ashford, D-Toledo, introduced HB123 in March 2017 but the bill sat dormant for months. Ohioans for Payday Loan Reform, a coalition of more than 50 civic, business and faith leaders, launched a campaign to put the issue on the statewide ballot.

Related: Payday lender made 3 international trips with ex-Ohio House speaker

Behind the scenes, FBI agents began investigating then Ohio House speaker Cliff Rosenberger's international travel that was underwritten in part by payday loan companies. The Clarksville Republican resigned April 10 after telling this newspaper that he had hired a criminal defense attorney to respond to FBI inquiries.

It took House Republicans nearly two months to pick a new speaker, delaying action on the payday lending reforms. The bill cleared the House on a 71-17 vote the day after Speaker Ryan Smith, R-Bidwell, took over. The House isn't scheduled to return to Columbus until September.

While the FBI raided Rosenberger’s home and storage unit in May, the former speaker maintains that all his actions were lawful and ethical.

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