Payday lending without bias

The Ohio capitol building in Columbus.

The Ohio General Assembly should be glad that the apparent inappropriate influence exerted by payday lending lobbyists over former Speaker of the House Cliff Rosenberger came to light now, while a payday lending reform bill can still pass.

Mr. Rosenberger (R., Clarksville) resigned last week after acknowledging that he hired a lawyer to help him in an FBI investigation. The FBI is said to be investigating an August trip to London involving Mr. Rosenberger, state Rep. Nathan Manning of Lorain County, and several lobbyists, including two who represent an auto-title loan company, Cleveland.com reported.

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State Rep. Bill Seitz (R., Cincinnati), who was not on the trip, said the bill was discussed on the trip.

Nothing can be more offensive to the voters of Ohio than to find out that industry lobbyists are paying for lawmakers to travel to exotic places and then using that exclusive time to push for their cause.

And what a cause it is — to be able to continue to charge exorbitant interest rates of as much as 591 percent on emergency loans to Ohioans in financial distress.

The Ohio Consumer Lenders Association, which represents short-term loan companies in the state, has denied any involvement in the trips involving Mr. Rosenberger, and Mr. Rosenberger has denied any wrongdoing.

A reform bill, co-sponsored by state Reps. Kyle Koehler (R., Springfield) and Michael Ashford (D., Toledo) sailed through the Government Accountability and Oversight Committee on Wednesday, as House members appear to be eager to be rid of the hot potato as fast as possible.

The payday reform bill would close loopholes payday lenders have used to evade a successful 2008 payday lending referendum. The Koehler-Ashford bill would allow loans of up to $500. Payments would be capped at 5 percent of a consumer’s monthly income. Loans would have an interest rate cap.

Payday lenders provide a service to people who don’t have other credit options to help them out of a jam. The flaw in payday lending as practiced in Ohio is that people are sucked into paying off loans at interest rates that trap them in a financial hole worse than the original one they were trying to get out of.

While the Senate decides what to do, a group of advocates for payday lending reform is trying to get another question on the ballot this year. The proposed constitutional amendment would cap the annual interest rates of short-term payday loans at 28 percent and provide for the charging of a $5 fee for each $100 borrowed, capped at $20.

A flawed constitutional amendment proved useless eight years ago and resulted in as many years of wasted effort. The Senate needs to act resolutely, stop catering to lobbyists offering campaign contributions, and enact payday lending reform.

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