Will payday fix become a reality?

COLUMBUS

Have Republicans in the Ohio House derailed an attempt to close loopholes in state law allowing lenders to charge triple-digit percentage rates on short-term loans?

We may find out next week, when the Democrat-controlled chamber resumes committee deliberations on House Bill 545, sponsored by Rep. Matt Lundy, a Democrat from Elyria, and Gerald Stebelton, a Republican from Lancaster.

Last week, it appeared that the legislation was poised to jump from the House’s consumer affairs committee to a floor vote in a matter of days.

Then a half a dozen minority members of that committee tried some parliamentary shenanigans, drawing the ire of House Speaker Armond Budish and leaving the bill in legislative limbo. For a few days, at least.

HB 545 would stop lenders from charging fees for cashing their own checks, limit the frequency of loan origination charges and prohibit broker loan fees.

You will recall that legislation passed by lawmakers, signed by the governor and confirmed by voters in 2008 was supposed to cap the annual percentage rate charged on short-term loans at 28 percent.

Small loan act

But instead of operating under the new law, lenders shifted their operations under the state’s Small Loan Act and Mortgage Loan Act, both of which allow them to charge rates comparable to or higher than those allowed under the prior payday lending law. Which flies in the face of lawmakers’ and voters’ intent.

“You can dress this product up as a short-term loan, but lets be real: It’s a usurious product that traps people in debt because of its design, because of its intent, because of its high interest and short payback period, because of its aggressive marketing strategies,” said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio. “Despite the mandate by Ohio voters, many of the payday lenders are doing high interest, short-term business as usual.”

But many Republicans don’t support the legislation now being proposed by Lundy and Stebelton, saying it will unnecessarily impede legitimate businesses operating under state law.

“Maybe instead of calling it consumer protection we’ll call this borrower prohibition,” said Rep. Bill Coley, a Republican from Middletown.

Which is why, during sponsor testimony on the bill this week, Coley attempted to “negatively report” the bill from the consumer affairs committee.

Maneuver

There’s not really any such thing as negatively reporting bills, as far as I can tell. But Coley, realizing he and his fellow Republicans outnumbered the majority Democrats on the committee at the time of the discussion, attempted the maneuver anyway.

The Democrats regrouped and found enough members to thwart the action. And they refused to recognize Coley for the remainder of the meeting.

Speaker Budish told Statehouse reporters later that he was “surprised and very disappointed” by the Republicans’ move, believing that there was bipartisan agreement to pass the bill.

He said he couldn’t predict whether HB 545 would make it to the floor next week.

Marc Kovac is The Vindicator’s Statehouse correspondent. E-mail him at mkovac@dixcom.com or on Twitter at Ohio Capital Blog.