A week after Republican Cliff Rosenberger’s abrupt resignation, state lawmakers moved to push through the strongest reforms on payday lending that Ohio has seen in a decade.
House Bill 123 calls for closing loopholes, limiting monthly payments to no more than 5 percent of the borrower’s monthly income, limiting fees to $20 or no more than 5 percent of the principal, requiring clear disclosures for consumers, limiting loan amounts to no more than $500 and allowing only one loan from any lender at a time.
A House committee voted 9-1 in favor of the bill, sponsored by state Rep. Kyle Koehler, R-Springfield, that would rein in abusive practices across the industry. State Rep. Bill Seitz, R-Cincinnati, was the sole no vote. House Speaker Pro Tempore Kirk Schuring, R-Canton, has said the bill will get a floor vote in May.
“It’s never too late to do the right thing,” Koehler said.
Ted Saunders, head of CheckSmart, which has 94 payday lending shops in Ohio, called the bill “unworkable” and would lead to restricted credit and job losses in the industry.
A decade ago, Ohioans voted by nearly a 2 to 1 margin in favor of capping payday loans at 28 percent APR. But payday lenders sidestepped the limits in place since 2008 by issuing loans under other sections of Ohio law. The result is that borrowers are paying annual interest rates of up to 591 percent — the highest in the nation according to some researchers.
The bill has faced a pitched battle: the measure stalled for more than a year but came alive after Rosenberger stepped down amid a federal investigation that sources say is tied to his travel with payday lending lobbyists.
Last week, the committee balked at taking action. This week, it eschewed efforts to weaken the bill and passed it as Koehler originally wanted it.