The Ohio Senate voted 21-9 on Tuesday in favor of sweeping reforms for the payday lending industry, 10 years after Ohioans overwhelmingly embraced strict limits on how much lenders could charge.
The bill co-authored by Republican Springfield representative Kyle Koehler was approved by the Ohio House in June, but there was a concern by supporters that the Senate would make major changes to the legislation.
That didn’t happen.
“I am very pleased that instead of replacing it or starting from scratch, (the Senate) took the structure of House Bill 123 and really didn’t change the structure at all,” Koehler said.
Koehler said he feels the changes made the bill stronger, allowing payday lenders to make money while still protecting consumers.
“I plan on standing on the floor and asking my colleagues to vote for concurrence,” Koehler said, meaning he hopes the legislation passes and makes it to the governor. “I believe that we have the votes and we are very excited.”
The new reforms would impact roughly 1 million Ohio consumers who take out the short-term loans.
There are 13 such stores are in Springfield and Urbana, many clustered on East Main and South Limestone streets. Ohio in all has more than 830 storefronts that offer payday or car title loans, most of which offer both forms of loans, according to a report by the Center for Responsible Lending.
“This is a pro-consumer bill,” said state Sen. Oelslager, R-Canton. “We have to do this to protect Ohioans as we move forward.”
Ten years ago, lawmakers passed a 28 percent APR cap on short-term loans but lenders used a loophole to issue high-cost loans through other sections of state law.
“They’ve been gouging Ohioans ever since,” said state Sen. Vernon Sykes, D-Akron.
State Sen. Bill Coley, R-West Chester, opposed the bill, saying, “Flat out: It’s a bad idea.” He said it’s ridiculous to think that any provisions in bill will stem the demand for payday and auto title loans.
House Bill 123 now returns to the House for consideration of Senate changes. Representatives are scheduled to return to Columbus in September.
The latest version calls for limiting loans to 12 months and principals 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 that led to some of the highest-cost loans in the country and limiting repayment schedules on loans of more than 90 days to 7 percent of the borrower’s monthly net income.
Also, loans that are secured with an auto title would be prohibited.
Koehler and Michael Ashford, D-Toledo, introduced their bill 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.
It became a political hot potato in April when it became public that the FBI is investigating then Ohio House speaker Cliff Rosenberger’s international trips that were underwritten in part by payday loan companies. The Clarksville Republican resigned April 10 and the FBI raided his home and storage unit in May.
The reforms are vehemently opposed by the payday lending industry. Lenders and their lobbyists as well as consumer advocates and their lobbyists have been working the halls of power for months on HB123. The bill has gone through whipsaw moments when momentum rapidly shifted from one side to the other.