Saturday, July 1, 2017
In its latest callous display of disregard for Ohio consumers, the predatory payday loan industry again has snubbed its nose at reforms and has stonewalled the political process toward that much-needed end.
Such behavior is hardly surprising, however, given the industry’s long track record of shrewdly manipulating the system to enrich itself at the expense of hundreds of thousands of vulnerable Ohioans.
For just as long, we’ve been in the front lines of reform advocates, calling for an end to the industry’s nefarious practices of charging stratospherically high interest rates and fees for short-term loans. Those rates weigh in at a jaw-dropping average of 591 percent per annum.
Payday lenders’ latest hijinks unfolded last week, when a group of them was scheduled to meet with state legislators working on provisions of the latest pending reform measure in the Ohio General Assembly, House Bill 123. The lenders, however, never showed up, according to the watchdog group Ohioans for Payday Loan Reform.
Of course, it does not take a rocket scientist to understand why they may have chosen to play hooky: The lenders appear to have no interest whatsoever in meaningful reforms at reining in interest rates that cost Ohioans an estimated $205,479 each day.
Given that backdrop, representatives and senators should not waste any additional valuable time trying to court uncooperative lenders for constructive input. It’s already past time to schedule public hearings on HB 123 and move the bill toward adoption.
FINE POINTS OF HB 123
As we argued in an editorial in this space more than three months ago, it should have been as easy as 1-2-3 to put HB 123 on the fast track from day one. It has many fine points.
First and most importantly, it provides enormous tangible relief to gouged consumers without endangering the viability of payday lenders. Specifically, it would limit the annual interest rate on short-term loans to 28 percent. It also would restrict monthly handling fees to 5 percent on the first $400 loaned, or a maximum of $20.
Contrast that with the $680 in interest and fees on top of the principal for a $300 loan. In the long run, borrowers tend to lose more than twice as much as they gain in the short term. Multiple and extended loans make that consumer punch all the more painful.
And contrary to the protestations of the Ohio Consumer Lenders Association and other mouthpieces for payday businesses, the reforms would not force the massive collapse of the industry’s 650 storefront locations throughout the Buckeye State, including dozens that operate in the Mahoning Valley.
In its review of the bipartisan legislation sponsored by Republican J. Kyle Koehler of Springfield and Democrat Mike Ashford of Toledo, researchers from the Pew Charitable Trusts concluded that the industry could still operate profitably under the reforms, which it considered to be “well designed and thorough.”
What’s more, Ohioans already have shouted out loudly and clearly their desire for wholesale change. Nine years ago, 67 percent of the electorate supported retaining similar reforms enacted then but challenged by the industry.
In spite of that popular mandate, leaders of the payday lending industry uncovered obscure loopholes that enabled them to continue to sock it to desperate cash-strapped Ohioans.
With so much going for it, we’re left scratching our heads wondering why the reforms have not yet cleared any major legislative hurdle and have been left to languish in the House Committee on Government Accountability and Oversight for four long months.
We’d like to think that the in- action has not resulted from overly cozy relationships between some legislators and fat-cat interests of the unacceptable status quo.
Democratic and Republican leaders in the Legislature can prove the cynics wrong by promptly scheduling public hearings on the bill for as early as possible when the General Assembly reconvenes this fall and then quickly shepherding the bill to passage by year’s end.
Ohioans cannot afford to wait any longer for long-lasting and real reform.