GOP Switcheroo on Payday Lending
After blocking proposals to cap interest rates on payday lending for months, the Republican leadership of the General Assembly has made a hard pivot and introduced a bill, HB 545, that goes much further in regulating payday lenders than the leading contender, HB 333 -- interest rates capped at 28% per year instead of 36%, number of loans limited to four per year, maximum amount cut from from $800 to $500, a minimum of 31 days to pay off a loan, internet-based payday lending banned, a statewide database created.
State Rep. Chris Widener (R-Springfield), chairman of the House Financial Institutions Committee, introduced the bill. He has been squelching payday lending regulation bills since early last fall, and just a few weeks ago Widener called the 391% annual rate payday lenders get away with now "a fictitious number" and said that he has "not heard anyone say that it's not fair." He proposed a bill that repackaged the 391% interest as an "origination fee." But now Widener, the same person as a few weeks ago as far as anyone can tell, is saying the opposite. "I'm proud of where we are at with this bill, and I think we'll have the strongest law in the country," he says now. House Speaker Jon Husted (R-Kettering) is also a fresh convert to looking out for the consumer: "We need to make sure that whatever legislation we move on payday lending it ends the cycle of entrapment that has found people in circumstances they cannot find a way out of."
So what happened? It became clear that the pressure to regulate payday lending was going to be too great to resist when Gov. Strickland announced his support for capping interest rates last week, with newspaper editorial boards around the state chiming in. GOP opposition was based not on principle but on campaign contributions from the industry. When it became clear that they couldn't prevent genuine payday regulation, they decided to own it instead, attempting to defuse a powerful campaign issue in the general election. In other words, once the GOP bus stops rolling from that hard turn they made, we'll find their payday lending buddies somewhere underneath it. But Widener's credibility might be harder to find.
UPDATE: State Reps. Bob Hagan (D-Youngstown), Matt Lundy (D-Elyria), and Tyrone Yates (D-Cincinnati), each a sponsor of one of the competing payday lending bills that preceded Widener's miraculous conversion, teamed up yesterday to praise the new bill in a joint press release:
“We are pleased that real reform seems to be coming to help Ohioans dig themselves out of a dangerous cycle of debt. After the Republican-dominated House stalled on our three pieces of legislation for months, our Caucus members called for a vote on an interest rate cap on payday loans, and we’re glad the Republicans have finally responded. This bill will provide avenues for people to get financial assistance, and it will protect them from the outrageous fees and interest rates payday lenders have lived on, unchecked, for years. This will help Ohio families manage their money through financial education and avoid the debt cycle that has damaged so many people.”