COLUMBUS, Ohio – Senate Republicans who hoped a new version of the payday loan bill would satisfy the industry became frustrated Monday afternoon when store owners told them more work was needed.
“You and your people have been involved in this bill for over a year since it was introduced,” Senator Scott Oelslager, chairman of the Senate Finance Committee, told Ted Saunders, CEO of the Senate. parent company of Checksmart. “So to sit there and say you weren’t part of the process, to sit there and say you got cut is ridiculous. Because the facts show otherwise.”
“You and your people and your many, many, many, many lobbyists have been very involved in this from the very beginning,” Oelslager added.
Oelslager later said he had asked the industry three times to meet with the Pew Charitable Trusts – which advocate changes to protect consumers – but the two sides never met. Oelslager said Senate Republicans have decided to go ahead, wanting to pass a consumer bill. Senators and their officials spoke with Pew and came up with an alternative version of Bill 123 that is more lender friendly.
The replacement version of House Bill 123 is expected to be voted on by the Senate Finance Committee at 9 a.m. on Tuesday. Assuming it passes, the entire Senate will meet to vote on the legislation at 11 a.m., Oelslager said.
Pew’s Nick Bourke said the replacement bill was not perfect, but that if passed, Ohio would be a model for nationwide reform.
“Low dollar credit will continue to flow in Ohio,” Bourke said.
Saunders, who is also president of the Ohio Consumer Lenders Association, had asked lawmakers to continue working on the legislation. He described being surprised to have read in the press that changes to the invoice were coming, without having been consulted about them.
“If this is the start of a process, I am ready to start working on it with you,” he said.
Under substitute for bill 123:
- The maximum loan limit would be $ 1,000, up from $ 500 in the original version of the bill.
- The terms of the loan could last up to 12 months. The original bill did not have a fixed term for loans.
- The cost of the loan – fees and interest – cannot exceed 60 percent of the original loan principal. In the original bill, it was 50%.
- The interest rate would not exceed 28% – the same rate in the original version and in line with what voters argued at the polls in 2008.
- There would be no loans of less than 90 days unless the monthly payment does not exceed 7% of the borrower’s monthly net income or 6% of gross income. Under the original invoice, the total monthly payment including fees and interest could not exceed 5% of gross income or 6% of net income and there was no fixed term for loans.
- Borrowers would be prohibited from carrying more than $ 2,500 in outstanding principal on multiple loans. There is no similar provision in the original version of the bill. Payday lenders in the replacement bill should do their best to check their commonly available data to determine where other people might have loans. The surrogate bill also authorizes the state to create a database searchable by lenders.
- Lenders could charge a monthly maintenance fee of the lesser of 10% of the loan principal or $ 30. The original bill called for a monthly maintenance fee of $ 20 or 5% of the first $ 400 borrowed, whichever is less.
- For loans that last longer than 90 days, lenders should provide consumers with an example of an affordability-based repayment schedule.
- It would ban harassing phone calls from lenders.
- Would require the lender to provide information on the cost of the loan orally and in writing.
Sen. John Eklund, a Republican from Munson Township, said he was annoyed to see the replacement bill minutes before the committee started.
Cheney Pruett, CEO of CashMax, said the surrogate was not much different from the original version of the bill.
Most people in the industry believe that the original form of the bill would bankrupt them. They take the risk of lending money to people with credit, they said. Industry members also said they just didn’t have time to comment much on the replacement bill because they only saw it a few minutes before the hearing of the committee.
“Who wins? It’s not your constituents who need access to short-term credit,” Pruett told Senators.