Frustrated consumer advocates are gearing up to put a ballot measure before Ohio voters that would rein in payday lenders in the state. If that sounds familiar, it is because Ohio voters approved a 2008 ballot measure that upheld a law aimed at doing just that.
Since then, however, predatory lenders have found ways to thwart the Short-Term Loan Act, and Ohioans have suffered for it. A study last year by the Pew Charitable Trust showed that payday loans in Ohio are more expensive than in any other state. Typically, Pew researchers found, those loans carry annual percentage rates of 591 percent. Yes, three-digit percentage rates.
A bill co-sponsored by state Rep. Michael Ashford (D., Toledo) would once again attempt to cap rates. After it was introduced in March, 2017, the bill was assigned to the House Government Accountability and Oversight Committee, where it has been sitting for nine months.
House Bill 123 would restrict interest rates to 28 percent. It also would limit monthly payments to 5 percent of a borrower’s gross income.
The payday-lending industry has complained that such restrictions would put them out of business. They also have argued that if excessive regulations drive payday lenders out of Ohio, underserved Ohio consumers will be denied important financial options.
Any business that can’t stay afloat without charging nearly 600 percent interest ought to go under. And the argument that underserved consumers in Ohio need access to predatory loans is insulting.
Reform advocates who have pushed for the bill have become frustrated enough to begin work on yet another statewide ballot measure that would accomplish the same regulations as the stalled bill.
They are tired of pressuring lawmakers. They are ready to take the measure directly to Ohio voters in the form of a constitutional amendment. Advocates are working up potential ballot language to submit to the state Attorney General.
The General Assembly should not make this necessary. The original Short-Term Loan Act enjoyed bipartisan support, as should this measure. Getting a grip on predatory lenders who charge Ohioans the highest interest rates in the nation should not require a constitutional amendment.
The Ohio House should move the bill out of committee and on to a full vote as soon as possible. The state Senate and Gov. John Kasich should move just as fast to approve it and sign it into law.
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