(Nati Harnik / Associated press)
Dozens of people – both in and outside Ohio – have worked hard for and against a bill restricting payday lending, which passed the Ohio Senate Tuesday.
House Bill 123 is set to become law, although it still needs final approval from the Ohio House, which won’t meet until at least September. Then he would head to Governor John Kasich for his signature.
The bill limits payday loan interest rates to 28%. Interest rates have no limit today because payday lenders bypassed 2008 interest rate requirements and are registering under part of Ohio law that does not no cap on interest or fees.
Ohio’s average interest rate is the highest in the country at 591%, a figure disputed by the industry, according to the Pew Charitable Trusts.
So who wins and who loses with the new restrictions? Read on for a list.
Winners: People who need short-term loans
(Elise Amendola, Associated Press file)
Ohio payday lenders say they have served 1 million people in the state.
Research shows that many are low- and middle-income people who have poor credit or don’t have a bank account.
HB 123 could save these people $ 75 million a year.
According to the Senate version of HB 123, which he calls the Equity in Loans Act:
- The maximum loan limit would be $ 1,000.
- The terms of the loan would not last more than 12 months.
- The cost of the loan – fees and interest – cannot exceed 60 percent of the original loan principal.
- The interest rate would not exceed 28%, which is what voters argued at the 2008 polls.
- There would be no loans of less than 90 days unless the monthly payment does not exceed 7% of the borrower’s monthly net income or 6% of gross income.
- Borrowers would be prohibited from carrying more than $ 2,500 in outstanding principal on multiple loans. Payday lenders should do their best to check their commonly available data to determine where other people might have loans. The surrogate bill also authorizes the state to create a database searchable by lenders.
- Lenders could charge a monthly maintenance fee of the lesser of 10% of the loan principal or $ 30.
- For loans that last longer than 90 days, lenders should provide consumers with an example of an affordability-based repayment schedule.
- Harassing phone calls from lenders would be banned.
- The lender will need to provide information on the cost of the loan orally and in writing.
- Borrowers would have 72 hours to change their mind about the loans and repay the money, without paying a fee.
This assumes that payday lenders and their lawyers cannot find a loophole to get around HB 123. The reason the bill is in the legislature in the first place is that they have found a loophole to get around a law. previous.
Losers: payday lenders
(Laura Hancock, Cleveland.com)
Ted Saunders, pictured above speaking to lawmakers, is the CEO of Dublin-based parent company Checksmart.
In the 16 months that the bill has been in the General Assembly, Saunders and other payday lenders have primarily fought against it.
Lawmakers have said they are fed up with the industry promising to negotiate a deal but never offering meaningful concessions on interest rates or fees.
So Senator Scott Oelslager worked with the Pew Charitable Trusts, a consumer advocate, on the version of HB 123 that was ultimately passed by the Senate.
Saunders earned $ 3.2 million last year in wages, bonuses and other compensation, according to April documents the company has filed with the United States Securities and Exchange Commission.
But will Saunders end up in the hospice under HB 123 – or will he become a payday loan client himself?
Oelslager modeled his HB 123 changes on Colorado law and believes Ohio payday lenders will be able to make a good profit. Colorado, after all, still has loan shops.
But the trade association Saunders chairs – the Ohio Consumer Lenders Association – said the bill would eliminate short-term loans statewide.
It remains to be seen whether lenders can still influence the bill before it becomes law.
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Losers: Payday Loan Lobbyists
(Vik Jolly, Associated Press file)
Dozens of people have registered with the state to lobby for or against HB 123. This included churches, nonprofits, local governments and payday lenders.
The actions of payday lender lobbyists appeared to weigh on senators.
“You and your people and your many, many, many, many lobbyists have been very involved in this from the very beginning,” an exasperated Oelslager, a Republican from the Northern Township, said at a committee hearing on Monday.
Oelslager was telling a payday lender that he shouldn’t be complaining about the direction the legislation has taken because the industry has refused to realistically compromise.
“I think at the last count there were 41 lobbyists representing the non-constituent side of the issue,” Senator David Burke told colleagues in the Senate on Tuesday, referring to the industry. “Forty one.”
Burke said the payday loan industry testimony has often consisted of conspiracy theories about the motives of consumer advocates, instead of ideas for the bill.
Ohio lobbyists hired by Pew Charitable Trusts, Mike Caputo and Rebecca Kuhns, even struggled to find a lawmaker to introduce the bill. It took almost a year, with Rep. Marlene Anielski, a Republican from Walton Hills, saying she would sponsor him, then move back.
In the end, the bill that was passed by the Senate was not at all what the lender lobbyists wanted.
Winner: Ohioans for Payday Loan Reform
(Laura Hancock, cleveland.com)
The bipartisan coalition of civic and community leaders known as the Ohioans for Payday Loan Reform wanted HB 123 to pass.
He is happy with the bill that was passed by the Senate, said coalition member Nate Coffman of the Ohio CDC Association.
The coalition had developed a proposal for a constitutional amendment, in case the legislator does not act.
Coffman said plans to collect signatures to get the proposal on the ballot are on hold at the moment.
If the House rejects the Senate version of HB 123, or if Governor John Kasich veto it, the coalition will once again turn its attention to the ballot amendment.
The people have pledged to financially support the proposed constitutional amendment and the volunteers are ready to rally, he said.
Winners: the sponsors of the bill
(Laura Hancock, cleveland.com)
HB 123 was sponsored by Representatives Kyle Koehler, a Republican from Springfield, and Michael Ashford, a Democrat from Toledo.
For over a year, the bill seemed to go nowhere, stuck in committee. But now he has passed both chambers, although he has to return to the chamber, where members will decide if they accept the Senate changes.
Koehler, pictured above, said he would recommend his colleagues in the House to support the Senate version.
“I am very happy with what President Oelslager has done to the bill,” Koehler said. “Instead of replacing him, he took the structure that we had… We had buffers in this bill to protect borrowers and help lenders make money, and I think he adjusted the buffers. . “
Winner: Senator Scott Oelslager
On June 27, Oelslager had a passionate exchange with Nick Bourke, a lawyer for Pew Charitable Trusts, who spoke about a shift in favor of payday loans that the industry wanted for HB 123.
But days later, Oelslager and his team consulted with Pew exclusively – not any payday lender – to change HB 123 in the bill that passed in the Senate on Tuesday.
It’s unclear exactly what happened behind the scenes after the June 27 hearing to prevent Oelslager from engaging with payday lenders. When asked by reporters, Oelslager generally explained how he asked the payday lenders to meet with Pew and find a compromise.
“What I told them was ‘Try to get together and keep talking’ on three different occasions in the past six or seven days,” Oelslager said. “And so, it just didn’t work. It happens.”
Oelslager said he wanted to introduce a bill in the Senate that would better protect consumers. He said he had to move forward without the industry.
For a list of Senators who voted in favor of HB 123, click here.
Losers: Senators who opposed HB 123
(Laura Hancock, cleveland.com)
The votes against HB 123 in the Senate were as follows, all Republicans: Sens. Bill Coley, John Eklund, Bob Hackett, Frank Hoagland, Matt Huffman, Kris Jordan, Rob McColley, Lou Terhar and Joe Uecker.
The final vote was 21-9, with three senators absent.
Huffman, seen standing and speaking to GOP staff above, proposed an amendment in June that critics have described as straight out of the industry manual.
GOP Senate leaders asked Huffman months ago to work on the proposal, but it came to nothing.
“I think the majority (of senators) were in favor of a little tighter regulation, but certainly more flexible than what the House has proposed,” Ohio Senate Speaker Larry Obhof said after adopting Oelslager’s version of HB 123.
Loser: Cliff Rosenberger
(Laura Hancock, cleveland.com)
As a powerful speaker of the Republican House when HB 123 was introduced, Rosenberger was in a position to make or break the bill. Under his watch, the bill stalled for more than a year.
But Rosenberger resigned from Ohio House on April 12, shortly after admitting to hiring a lawyer to help him with an FBI investigation into his travels with payday lenders.
Rosenberger said he hadn’t done anything wrong.
But for some reason his resignation gave HB 123 the momentum it was lacking. After Rosenberger left, the bill was passed in committee and full house – without any changes, which is unusual for such a controversial bill.
The FBI does not know if Rosenberger will be charged with a felony. Officers searched his house and storage unit on May 23.
Whatever the outcome, his political career seems over.