Coalition wants reform on November ballot
Concerned that Republican legislative leaders are dragging their feet on new payday-lending restrictions, a coalition of religious leaders and others started the process Wednesday to put a constitutional amendment on the November ballot.
Meanwhile, Rep. Kirk Schuring, R-Canton, the No. 2 House leader, said he expects to see a new payday-lending proposal rolled out within the next two weeks.
Highlighting a report from The Pew Charitable Trusts that says Ohio has the highest payday-lending interest rates in the country — some exceeding 500 percent — leaders of Ohioans for Payday Reform turned in about 2,000 signatures to the attorney general.
Supporters of the proposal, which is similar to House Bill 123 sponsored by Rep. Kyle Koehler, R-Springfield, are “impatient and upset with the decade-long wait we’ve had for reform to take place,” said Nate Coffman, executive director of the Ohio CDC Association, which represents community development corporations, and a leader of the coalition.
The bill is modeled after a law in Colorado. It would allow short-term lenders to charge a 28 percent interest rate, plus a monthly 5 percent fee, on the first $400 loaned. Monthly payments could not exceed 5 percent of a borrower’s gross monthly income.
Ohio lawmakers passed a law in 2008 that restricted payday lending annual interest rates to 28 percent, and voters upheld it by a 2-to-1 margin. However, payday lenders found a way around the restriction, operating instead under parts of Ohio law not written with payday lending in mind. GOP leaders have not acted to fix the law.
“I can tell you as someone who has been gathering signatures, Ohioans intuitively know what payday lenders are, and they know they are bad,” Coffman said. “The payday-lending industry is adept at deception, arguing this will shut down all credit options for low-income Ohioans. It couldn’t be further from the truth.”
In the House, the focus is on amending Koehler’s bill. Schuring said he’s optimistic he can find a compromise that would get some support from the payday-lending industry.
Some people who don’t qualify for conventional lending need access to emergency loans, Schuring said.
“The problem is many of them, because of the current laws, find themselves entrapped in a cycle where they can’t get out of a payday loan,” he said. “We want to find them a pathway to break out of that.”
Coalition leaders also say their goal is to avoid having low-income borrowers fall into a debt trap, where they must repeatedly take out new two-week loans to pay off old ones, accumulating additional fees.
Patrick Crowley of the Ohio Consumer Lenders Association, a paydayadvocacy group, criticized the coalition’s plan.
“This callous and cruel proposal will mean that millions of working class Ohioans will be completely cut off from any access to safe, legal and regulated credit,” he said.
The move also comes as the Trump administration backs away from federal payday-lending rules proposed by the Consumer Financial Protection Bureau. Those rules were pushed by former bureau Director Richard Cordray, who stepped down in November and is running for the Democratic nomination for Ohio governor.
If 1,000 signatures are verified within the next 10 days, and the attorney general determines the proposal’s summary fairly describes it, the coalition can begin collecting the 306,000 valid signatures needed to qualify for the ballot.