A faith-based coalition led by a Springfield pastor held a prayer vigil Wednesday at the Ohio Statehouse to bring attention to their payday lending reform bill in the midst of legislators finalizing the state budget.
More than 100 religious leaders joined the the Faith Coalition: A Movement for Lending and Reform Central Church Rev. Carl Ruby of Springfield at the rally.
“The need for this bill is very urgent,” Ruby said. “Ohioans pay more for payday loans than any state in the nation. So when a person takes out a payday loan, they’re paying close to 600 percent interest. And most of the people who are taking out these loans are people who live at or near the poverty line.”
But supporters of the payday lending industry oppose the bill, saying it would hurt consumers, many of whom have few other credit choices.
Referendum 5, also known as Ohio Payday Lender Interest Rate Cap Referendum, was passed in 2008 but a loophole allowed lenders to license themselves as short-term mortgage lenders instead of payday lenders.
“And since then, they’ve been able to operate with almost no regulation,” said Kyle Koehler, the Springfield Republican who has co-sponsored the new bill.
The proposal, House Bill 123, doesn’t call for ending payday loans but would give borrowers more time to repay their loans with affordable payments.
The bi-partisan bill was introduced March 8.
“We’re here because we want to see Speaker Rosenburger call for a hearing on a bill that we’ve been working on with representatives Kyle Koehler and Mike Ashford to regulate payday lending centers,” Ruby said.
The Ohio Consumer Lenders Association, the main opposition to House Bill 123, said in a statement that they’re committed to making sure hundreds of thousands of underbanked Ohioans continue to have access to affordable credit options.
Any new legislation that imposes restrictive caps or regulations will harm the consumers lawmakers want to help by eliminating credit choices and exposing consumers to more expensive options, such as unregulated off-shore internet lenders, overdrafts, utility shut off fees or illegal lending activities.
But proponents argue the bill would return $75 million every year to working class families in Ohio, Ruby said, and Springfield’s portion of that would be between $1 million and $2 million.
“We met with Speaker Rosenburger with a number of victims of payday loan centers who told their stories and it was neat to see him encourage them,” Ruby said.
Lawmakers only have two weeks left for the bill to be brought up for its first hearing because they will soon return to their districts for summer recess.
“This is going to be a push in the House, but also in the Senate,” Koehler said. “But we’re very encouraged because we’ve had meetings with leadership, I’ve spoken about this in caucus, we’ve had meetings with Pew Charitable Trust, they’ve met with the speaker and with the new majority floor leader.”
Because they’ve started conversation about the bill now, he believes when legislators return in the fall, the bill will still be familiar to them.
Koehler stressed that the process would take time.