The Ohio House overwhelmingly passed the long-awaited Payday Loans Act, which aims to fill loopholes that leave lenders charging high interest rates.
Thursday’s vote will come immediately after Parliament elects a new spokesperson, and while a reported FBI investigation continues to investigate activities involving the former spokesperson and payday loan lobbyists.
Republican MP Kyle Koehler says the passing of HB 123 will help many Ohioans who tell him the interest they pay on their payday loans is so high that they cannot afford basic things like groceries.
“Another customer I met told me that she paid $ 200 from her social security check for a $ 1,200 loan for four years,” Koehler says.
Koehler notes that this adds up to a total of $ 9,600 – eight times the original loan amount.
But Republican compatriot Bill Seitz says people who take advantage of these loans want him to vote against the bill that could close payday loan deals, according to the industry. He says it’s like borrowing $ 10 today and paying back $ 11 tomorrow.
Seitz used a reference from the 1970s sitcom Sanford and Son to clarify his point.
“The annual interest rate for this one-day loan is 3,650 percent,” says Koehler. “Oh dear God. Elizabeth, I’m coming to you. 3,650 percent? Oh dear God. But actually most of us would think that’s pretty reasonable.”
Seitz says it would be better to give banks and credit unions the ability to charge higher interest rates so they can afford to get into the short-term lending business.
But in the end, most legislators were on Koehler’s side. The bill was passed by House 71-17 and now goes to the Ohio Senate.
The bill came off the committee shortly after former spokesman Cliff Rosenberger resigned. This was reportedly related to an FBI investigation into his trip with payday loan lobbyists. In committee, legislators rejected amendments that proponents feared would water down the reforms.
Whether or not the Ohio Senate puts a stamp on the current bill, advocates of payday loan reform are working to bring the issue straight to voters. Last month, the Ohio Ballot Board cleared the way for supporters to collect signatures for a constitutional amendment that would introduce regulations similar to HB 123.