The Ohio House overwhelmingly passed long-awaited payday loan legislation designed to fill loopholes that lenders use to charge high interest rates.
Thursday’s vote comes just after the House has elected a new president, and as an FBI investigation continues to investigate activities involving the former president and payday loan lobbyists.
Republican State Representative Kyle Koehler said passing HB 123 would help many Ohioans who tell him the interest they are paying on their payday loans is so high they can’t afford basic things like groceries.
“Another client I met told me that she had paid $ 200 for four years on her Social Security check for a loan of $ 1,200,” says Koehler.
Koehler notes that this adds up to $ 9,600, or eight times the original loan amount.
But his colleague, Republican State Representative Bill Seitz, said people using these loans want him to vote against the bill, which the industry says could shut down payday loan stores. . He says it’s like borrowing $ 10 today and paying off $ 11 tomorrow.
Seitz used a reference from the 1970s sitcom Sanford and sons to assert his point of view.
“The APR on this one-day loan is 3,650%,” says Koehler. “Oh my god. Elizabeth, I’m coming to join you. 3,650%? Oh my god. But actually, most of us would think that’s perfectly reasonable.
Seitz says the best thing to do would be to allow banks and credit unions to charge higher interest so they can afford to get into the short-term lending business.
But in the end, most lawmakers sided with Koehler. The bill passed House 71-17 and now goes to the Ohio Senate.
The bill rolled off committee just after former President Cliff Rosenberger resigned, apparently linked to an FBI investigation into his travels with payday loan lobbyists. In committee, lawmakers rejected amendments that supporters said would weaken the reforms.
Whether the Ohio Senate approves the current bill or not, payday loan reform advocates are working to bring the issue directly to voters. Last month, the Ohio Ballot Board paved the way for funders to begin collecting signatures on a constitutional amendment that would institute regulations similar to those of HB 123.