Frustrated with the lack of legislative action to rein in payday lending rates in Ohio, a coalition says it is starting the process for a November ballot issue.
House Bill 123, a payday regulation bill sponsored by Reps. Kyle Koehler, R-Springfield, and Mike Ashford, D-Toledo, has had two committee hearings since its introduction in March 2017. Supporters are not convinced that majority Republicans are serious about passing reforms that would lower rates and end the debt cycle that forces borrowers to repeatedly take out new loans to pay for old ones.
The Pew Charitable Trusts says Ohio payday lenders, which offer small, short-term loans, charge the highest annual percentage rates in the nation.
"We have received little more than lip service regarding HB 123," said Carl Ruby, a Springfield pastor and one of the leaders of the payday loan effort. "We have tried, and will continue to try, to move this legislation forward, but the lack of progress by state leaders is no longer acceptable."
Under the proposed constitutional amendment, payday loans would be limited to a hard 28 percent annual interest rate cap — a rate on which payday lenders say they cannot survive. Banks, credit unions and other federally insured institutions would be exempt.
But the proposal also says that, if lawmakers want to enact legislation very similar to House Bill 123, then that law, rather than the hard 28 percent cap, would take effect.
Payday industry supporters say the bill would shut down many stores, leaving thousands of Ohioans with no other credit options. But Pew has argued that the bill, modeled after a Colorado law, would leave enough payday stores operating.
Ohioans for Payday Lending Reform, which would need to collect about 306,000 valid signatures of registered Ohio voters to qualify for the November ballot, notes that voters overwhelmingly approved payday lending limits in 2008. However, no current payday lenders are operating under that law.
"Absent help from the Ohio legislature, we are sure the people of Ohio will agree to stop lenders from charging more than 28 percent on small loans," said Nate Coffman of Columbus, another coalition leader and executive director of the Ohio CDC Association. "And this time, we will make sure there are no loopholes."
House Bill 123 would allow short-term lenders to charge a 28 percent interest rate plus a monthly 5 percent fee on the first $400 loaned. Monthly payments could not exceed 5 percent of a borrower's gross monthly income.
Speaker Cliff Rosenberger, R-Clarksville, said Wednesday "we’re getting closer and closer" to an agreement on new payday regulations. "I hope to have the right mix here soon. It’s not an easy fix but it’s something, I think, that we can get something done."
Rosenberger said his caucus is talking about doing something different than what Koehler and Ashford have proposed, but he did not disclose details.
The payday industry, including title loan companies, has given more than $1.6 million in Ohio campaign contributions since 2009. That includes donations to Gov. John Kasich ($79,155), Rep. Keith Faber, R-Celina, ($74,950), Secretary of State Jon Husted ($68,046), Rosenberger ($64,250) and Auditor Dave Yost ($48,828).
The industry also gave $100,000 to the bipartisan 2015 redistricting campaign, and a combined $207,000 to the House and Senate GOP campaign committees.
"We remain committed to work with members of the General Assembly and all interested parties on appropriate reforms that do not jeopardize access to credit for the millions of Ohioans we serve," said Patrick Crowley of the Ohio Consumer Lenders Association, which represents the payday industry. "PEW's continued misrepresentations — assertions that they know to be false — are not helpful to achieving any reform."
Jim Siegel is a reporter with the Columbus Dispatch.