Ohio Payday Lending Reform Stalled By House Republicans

Apr 12, 2018

Ohio House Republicans balked at passing a bill to reform the payday lending industry just hours after Cliff Rosenberger, the top Republican leader, stepped down amid an FBI inquiry.

Sources suggest that inquiry is tied to inappropriate contact with payday lobbyists. The bill was slated for a vote before some House leaders slammed on the brakes.

A House committee room was full of consumer advocates and the top players for the payday lending industry, including store owners and lobbyists, as Republican Rep. Kyle Koehler laid out some changes he wanted to add to his bill.

“We have to put in a piece of statute that actually has some guidelines,” Koehler said.

Among the changes in his amendment is a requirement for longer loan periods to give borrowers more time to pay of their bills. Koehler said this would avoid one of the pitfalls of short term borrowing when someone only has a few weeks to pay off their loan so they take out a new one, with new fees and new interest rates, to pay off their initial loan.

“If I don’t have to come in in two weeks and I can just make six payments over six months that’s gonna stop the churning," Koehler said. "The person that borrows the $300 is not going to come back in two weeks for another loan because they’ve got the money they needed. The reason they’re coming back in two weeks is because they couldn’t pay the loan off."

Koehler and his Democratic co-sponsor, Rep. Michael Ashford, have been pushing for a crackdown on payday lenders for more than a year.

The bill was set for a vote in the House Government Accountability and Oversight committee, but that didn’t happen. They didn’t even hold a vote to accept or table the amendment, which is an unusual move.

Republican Rep. Louis Blessing, who chairs the committee, says the decision to sit on the bill was to give members more time to look over the changes.

“Everyone knows what’s in the amendment so we have time to walk away digest it, everyone can relax and we’ll move from there,” said Blessing.

Fellow Republican Rep. Bill Seitz was vocal about his desire to postpone the vote, as was Republican Rep. Dorothy Pelanda.

“This is less than 24 hours and a 27-page amendment that according to the sponsor, substantially changes the bill causes me real concern,” Pelanda said.

This committee met just hours after Rosenberger announced he would be stepping down May 1, as the FBI is reportedly looking into links between Rosenberger’s international travel and the payday industry.

When asked by a group of reporters, Pelanda didn’t want to comment as to whether she thought, considering these recent events, if it was important to regulate payday lenders.

When Blessing has asked about the FBI inquiry, he said he had to take a phone call and walked away from reporters.

Ohioans for Payday Loan Reform have been pushing for Koehler and Ashford’s bill. They say the reason it’s so hard to get anything passed is because the payday lending industry has donated so much money to lawmakers. In the last nine years they’ve doled out $1.6 million in campaign contributions.

Ohio voters approved capping these loans at 28 percent in 2008, but consumer advocates say the industry has gotten around those caps and that an annual percentage rate can still skyrocket to 591 percent.

Ted Saunders, CEO of CheckSmart, argues that those high APR’s are a very rare occurrence. He adds that lengthening the loan period gives borrowers an excuse to put off payment.

“I shouldn’t say, ‘Well thank you for saying that, you can pay it off over your next three or four paychecks and only accrue the fees and interest, which everyone objects to, for three periods, let’s instead take it over six months,'” Saunders said.

It was argued that Koehler’s proposed schedule would keep a flat interest rate and fee, whether it’s over two weeks or six months.

“Pretty complicated bill. I’d have to argue with you we can sit down, get a spread sheet out and start spreading the numbers but it’s not exactly how it works,” Saunders argued.

Putting the bill off in committee means it’s likely Ohio lawmakers won’t touch it until after summer break, which might not end until after the November elections. However, Ohioans for Payday Loan Reform are working on putting payday lending reform on the November ballot for that very reason.