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Ohio Senate passes stringent payday lending bill
DUBLIN, Ohio (5/15/08)--The Ohio Senate voted 29-4 Wednesday to approve landmark legislation that will impose some of the most restrictive regulations in the country upon Ohio’s payday lending industry. State lawmakers made a distinction between Ohio's payday lending industry and a program offered by credit unions as an alternative to short-term lending. The legislation, substitute House Bill 545, does not impact the StretchPay program offered by many Ohio credit unions as an alternative to short-term lending. The bill caps the interest rates that payday lenders can charge consumers at 28% annual percentage rate (APR) (down from the current 391% APR), prohibits loans of less than 31 days, and limits consumers to four payday loans per year. It would also ban Internet payday lending. Despite attempts within the past few days by some opponents of the bill to equate themselves with credit unions, the Ohio Credit Union League was able to continue its educational work in the Senate by again informing legislators on the all-around financial relationships that credit unions have with their members. “While some parties talked about credit unions possibly being an alternative vehicle for payday lending customers, the league has always maintained, and legislators supported, the idea that our mission is not remotely close to the corporate design of a payday lender,” said league General Counsel John Kozlowski. “Comparing the two entities was an extreme reach at the very best.” League President Paul Mercer praised Kozlowski and Capitol Advocates, the league’s retained Statehouse lobbying partners. “Credit union interests were protected and advanced with great success,” said Mercer. He also complimented politically active credit unions throughout Ohio. “The personal relationships that credit unions have with legislators in their districts were crucial in deterring efforts by some parties to draw credit unions into the debate on HB 545,” said Mercer. “We have maintained since day one that credit unions are not payday lenders and do not exist for the sole purpose of providing small-amount loans,” said Kozlowski. “Credit unions have always focused on an overall financial relationship, including financial literacy and education, for all members.” The Senate Finance and Financial Institutions Committee Wednesday morning made minimal changes to the legislation, which the Ohio House of Representatives passed two weeks ago. Most of the minor changes to the bill were requested by the Ohio Department of Commerce. They included a seven-month delay in implementing a statewide consumer database required by the legislation. Substitute HB 545 will go back to the Ohio House next week for a vote to approve the changes made by the Senate. If the House concurs with the Senate bill, HB 545 will then go to Gov. Ted Strickland for his signature.
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