At last, payday loan reform is at hand in Ohio: editorial

Ace Cash Express in Cleveland, photographed in November, offers payday lending, prepaid debit cards and check cashing. (Sharon Broussard, cleveland.com, File, 2017)

Finally.

In a 21-9 vote this afternoon, the Ohio Senate passed a long-sought payday loan reform bill that repeatedly had been delayed and threatened with debilitating amendments by the vigorous lobbying of payday lenders.

In the end, political common sense prevailed. GOP Senate leaders may wisely have decided not to appear to be kowtowing again to lobbyists possibly implicated in a federal investigation of former Ohio House Speaker Cliff Rosenberger, who resigned earlier this year.

The Senate's action returns the House-originated measure, House Bill 123, to the House for its approval of Senate amendments.

"This law has no loops and no holes - it is watertight," crowed Nate Coffman, leader of Ohioans for Payday Loan Reform, in a statement. "The Ohio legislature has acted on behalf of their constituents who use these short-term loans. This was a choice about the people versus payday lenders, and the Senate chose wisely."

The bill's co-sponsor, Rep. Kyle Koehler, a Springfield Republican, said he would ask the House to approve the Senate's changes. House concurrence would send the measure to Gov. John Kasich. The House approved its version of the bill in a 71-17 vote on June 7.

All nine Senate "no" votes against the bill were cast by Republicans, including Sen. John Eklund, of Geauga County's Munson Township. But overall, Senate Republicans, led by President Larry Obhof, of Medina, deserve substantial credit for passing the bill, which offers borrowers significant protections while also broadening, to some extent, the profit margins the House bill authorized. Helping to move the bill to passage was Sen. Scott Oelslager, a North Canton Republican who chairs the Senate Finance Committee.

As tweaked by Senate Republicans, HB 123 "is a thoughtful, bipartisan, and fair compromise that builds upon the framework of the House bill," said Nick Bourke, of the Pew Trusts' consumer loan project. The trusts have been leading advocates of payday loan reform in Ohio.

Today's Senate vote came after a 16-month Statehouse slog to pass the bipartisan measure, sponsored by Koehler and Rep. Michael Ashford, a Toledo Democrat. Payday lenders steadily opposed the bill. According to the Pew Charitable Trusts, based on a 2016 calculation, payday loans can cost Ohio borrowers annual percentage rates as great as 591 percent.

The legislative logjam on HB 123 started to break up in April, when a House committee approved the bill 9-1 a week after Rosenberger resigned. The FBI is said to be investigating a Rosenberger junket to London that included several payday loan lobbyists.

After the House finally chose Ryan Smith, a Gallia County Republican, as its new speaker, he called the vote on HB 123.

The bill as passed by the Ohio Senate ensures that payday lenders will abide by a 28 percent interest rate cap for loans up to $1,000 for up to 12 months, according to cleveland.com's Laura Hancock. Assuming the House concurs in the Senate's amendments, the 10 percent of Ohioans believed to use payday loans will save an estimated $75 million a year, Hancock reported.

The Senate's vote, like the House's in June, was constructive and thoughtful, and benefits Ohioans statewide.

About our editorials: Editorials express the view of the editorial board of cleveland.com and The Plain Dealer -- the senior leadership and editorial-writing staff. As is traditional, editorials are unsigned and intended to be seen as the voice of the news organization.

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