Legislation is best remedy to reform payday lending

Legislating is best handled by elected lawmakers, and a duly debated bill would be the best way to reform payday lending in Ohio. We hope it happens that way. But given current paralysis in the House of Representatives and the ongoing determination of the payday-lending industry to fight reform, it’s no surprise that a ballot issue to address the matter is moving forward.

Ohioans for Payday Loan Reform, the coalition of faith-based and anti-poverty groups behind the ballot drive, cleared another hurdle last Tuesday when the Ohio Ballot Board certified its proposed ballot language. That means the group can start collecting 300,000plus petition signatures they’ll need to put the matter on the ballot as soon as this November.

We hope it won’t come to that. Assuming House members manage to choose a new speaker in a vote scheduled for Wednesday, the new speaker should move quickly to put House Bill 123, which would cap interest rates and fees that short-term lenders can charge, to a vote.

If the House doesn’t act to reform payday lending, backers of the ballot issue likely will have no trouble getting signatures or votes. Ohioans showed their support for lending reform 10 years ago, when voters overwhelmingly upheld a new reform law that the lending industry tried to have repealed. Back then, the payday-lending industry spent $18 million backing the repeal effort and yet won only 36 percent of the vote.

“If it comes to a vote of the people, the people are pro-reform,” said Nate Coffman, of the Ohio CDC Association, one of the groups that has pushed for passage of H.B. 123 but is preparing to go to the ballot in case lawmakers don’t act.

Unfortunately, Ohioans for Payday Reform is pursuing an amendment to the Ohio Constitution, which would further clutter the state’s foundational governing document with matters of policy that should be handled in statute.

Ohio has an “initiated statute” process to allow voters to approve new proposed laws, but interest groups seeking change tend to go the route of constitutional amendments. Amending the constitution requires fewer steps and, once approved by voters, an amendment isn’t easy to undo. A new law, by contrast, could be relatively easily repealed by an unsympathetic legislature.

The ballot group says it would prefer the legislature to act, and we agree.

The House, if it ever gets back to work, has before it a good vehicle for reform in H.B. 123. It languished in committee for more than a year while lendingindustry lobbyists raised objections. Earlier this year, a “compromise” version of the bill, backed by the industry, would have undermined much of the intent.

Notably, the long-stalled bill got a quick vote of approval from a committee in its undiluted form on April 18, just days after former House Speaker Cliff Rosenberger, a Republican from Clarksville, resigned amid an FBI investigation of an expensive overseas trip he took in the company of payday-lending lobbyists.

It seemed headed for passage in the House and Senate, but the unseemly battle over who should be the next speaker has shut down all House voting on bills, and House Bill 123 is just one of more than 150 currently awaiting action.

Payday lending reform should be among the first to be approved when the legislature returns to life.