Thursday, June 28, 2018
Any way you look at it, the decision by Republican leaders in the Ohio Senate to postpone a vote on a payday-lending regulation bill is a huge victory for predatory lenders.
Of course, the industry would like the legislation to simply disappear into the political ether, but they will settle for the next best thing: Delay.
The longer the bill languishes in the Senate, the greater the chances that it will be watered down to such an extent that it will be meaningless.
Indeed, before Tuesday’s announcement of the delay by GOP Senate President Larry Obhof of Medina, there were indications that pro-industry senators were succeeding in pushing back against provisions that lenders find objectionable.
Sen. Bill Coley, R-West Chester, a member of the Senate Finance Committee that is marking up the bill, said the measure in its current form would put lenders out of business.
It is important to note that the Republican leadership in the Senate is balking at a bill passed by the Republican-controlled House earlier this month.
The vote wasn’t even close: 69 for, 14 against.
The legislation had languished in the House for 15 months, but things changed a couple of months ago when it became known publicly that the FBI is investigating former Speaker Cliff Rosenberger’s travel overseas with payday-lending industry lobbyists.
Rosenberger resigned but denied his departure had anything to do with the investigation.
However, with Democrats latching on to the FBI probe as one more example of the pay-to-play climate engendered by the Republican majority in the General Assembly, it became politically untenable for the GOP leadership to keep House Bill 123 on the shelf.
With its passage, it seemed that the GOP was finally respecting the will of the people of Ohio.
A decade ago, Ohioans went to the polls and reaffirmed a state law that restricts the annual interest rate for payday loans to no more than 28 percent.
Circumventing the law
But lenders found a way to circumvent that law by doing business under the Mortgage Loan Act. As a result, they have continued to charge more than 500 percent interest rates and have been able to demand repayment in one lump sum.
There are more than 600 payday lenders, including about three dozen in the Mahoning Valley, and they aren’t about to let anyone kill the goose that’s laying the golden eggs.
Thus, the industry has turned its sights on the Senate, where Republicans seem willing to throw political caution to the wind.
Senate President Obhof told the Associated Press his chamber needs more time to complete its work. He said he would trim the Senate’s usual summer break to add session dates in September and possibly July and August.
According to the wire service, Obhof is aiming for a final bill that would be agreeable to the Ohio House.
That will be easier said than done because the changes Senate Republicans are proposing for HB 123 are clearly designed to appease the payday-lending industry.
Consider the issue of the interest rate applied to a loan.
According to the Columbus Dispatch, under the current House version of the bill, a typical borrower getting a $500 loan would pay about $125 a month for six months for a total of $750.
By contrast, a proposal from Sen. Matt Huffman, R-Lima, would require repayment of $650 within 30 days, or as much as $1,135 if the loan were stretched out to six months.
The Dispatch reports that about 1 million Ohioans have taken out a payday loan at some point, using the short-term, high-cost credit available to those who need fast money but might not qualify for a traditional loan.
The high fees and interest force many desperate low-income borrowers to re-borrow money, with new fees, to pay off prior loans.
This cycle of debt has been the bane of existence for too many Ohioans, which is why the voters 10 years ago overwhelmingly brought the hammer down on the payday-lending industry.
Today, however, the Republican-controlled state Senate is working to provide payday lenders with an escape hatch.
That’s an unacceptable violation of the public’s trust.