Kasich signs payday-lending bill, others
Fixing a broken law passed 10 years ago, Gov. John Kasich signed a bill Monday that is aimed at limiting the interest and fees charged by Ohio payday lenders while setting up more-affordable loan terms for low-income borrowers.
Kasich also signed a bill allowing restaurants to permit dogs in outdoor eating areas, and one allocating $114.5 million for counties to buy new voting machines.
He also signed a bill designating part of Interstate 270 on the north side of Franklin County as the “Officers Anthony Morelli and Eric Joering Memorial Highway,” honoring the Westerville officers shot and killed in February.
Although House Bill 123 is praised by consumer advocates, the payday-lending industry strongly opposed it. The bill underwent an unusual legislative process that featured a yearlong delay followed by rapid action.
The industry has said the bill would put many — if not all — of its stores out of business.
“The biggest losers are the constituents who now have fewer options for access to cash in the event of a financial emergency,” Patrick Crowley, spokesman for the Ohio Consumer Lenders Association, said earlier this month when the bill passed. “Idealism won today; the consumers of Ohio lost.”
Supporters, including The Pew Charitable Trusts and a coalition pushing a 2019 ballot issue on payday lending, praised the bill as a national model for ensuring that consumers desperate for short-term credit can get loans without being trapped in a cycle of debt in which they repeatedly take out new loans to pay off prior ones.
Pew said Ohio payday lenders’ interest rates were among the highest in the nation for loans that were often required to be paid back in 30 days or less.
Both the Senate and House held rare July sessions to approve the bill.
The bill “will help reform an industry that desperately needs it” and “will provide interest relief, among other things, to some of Ohio’s most vulnerable borrowers,” said Rep. Laura Lanese, R-Grove City.
Lawmakers approved a payday-lending law in 2008, and voters upheld it, but lenders quickly found ways to skirt its new cap on interest rates. For years, lawmakers were reluctant to tackle the issue again, but Rep. Kyle Koehler, R-Springfield, pushed hard for the bill.
Other factors also influenced passage:
• In the wake of House Speaker Cliff Rosenberger’s resignation in April amid an FBI inquiry into his overseas trips attended and partially funded by payday-lending lobbyists, the bill quickly moved through that chamber without changes.
• Last fall, Rosenberger abruptly shifted the responsibility of rewriting the bill from Rep. Bill Seitz, R-Cincinnati, an industry supporter, to Rep. Kirk Schuring of Canton, a more moderate Republican and the No. 2 House leader.
• Senate President Larry Obhof, R-Medina, initially tasked Sen. Matt Huffman, R-Lima, an industry supporter, with crafting changes to the bill. But when consumer advocates criticized Huffman’s proposals, the task was shifted to Sen. Scott Oelslager, R-Canton, who worked out the deal signed by Kasich.
• Some in the Republican majorities pushed for strong regulations, and some, including Oelslager and new House Speaker Ryan Smith, R-Bidwell, grew frustrated with the industry’s negotiating tactics.
• Signatures were being gathered for a 2019 ballot issue that, if approved, would have placed language similar to the original version of House Bill 123 into the state Constitution.
• As the former head of the Consumer Financial Protection Bureau, which made payday-lending regulations a key focus, Richard Cordray, Ohio’s Democratic nominee for governor, would have hammered on the issue if GOP lawmakers did not act.
“For years, our state suffered under the worst payday-lending laws in the country while leaders in the Statehouse did little to protect the money of hardworking Ohioans,” Cordray said after Kasich signed the bill. “This legislation is a step in the right direction.”
Under the bill, a maximum loan of $1,000 can be made for 30 days to 2 months, although no loan for less than 90 days can require a monthly payment of more than 7 percent of a borrower’s monthly net income. The interest rate is capped at 28 percent, plus a monthly maintenance fee of 10 percent or $30, whichever is less.