Ohio News: Payday lendors submit enough signatures
Date: Mon, 09/01/2008 - 06:44
A new state payday-lending law hailed by consumer advocates as one of the best in the nation takes effect today, but lenders in Ohio can pretty much ignore it for now.
A key section of House Bill 545 is on hold because a payday-lending coalition filed more than 400,000 signatures with the Ohio secretary of state's office yesterday in its effort to qualify a referendum for the November ballot.
During the next three weeks, county elections boards will determine whether lenders have the 241,365 valid signatures they need.
A referendum at least temporarily prevents a law from taking effect. In this case, lenders are pushing for only a partial repeal of House Bill 545, targeting the section that would eliminate Ohio's check-cashing lender law and no longer allow lenders to charge a 391 percent annual interest rate.
While other parts of the bill, including a 28 percent interest rate and a limit on the number of loans per year, are technically in effect, they are largely meaningless. Payday lenders can continue business as usual unless their referendum is not certified for the ballot, or a majority of voters uphold the law in November.
"This effort was a great opportunity to hear from Ohioans, and it's clear from this massive number of signatures there is a strong sentiment among voters that politicians need to stop killing jobs and financial choices in the state," said Bridgette Roman, legal counsel for Dublin-based CheckSmart and a lead member of the payday coalition.
A "no" vote on the issue would allow lenders to continue charging a 391 percent annual interest rate ($15 per $100 on a two-week loan). A "yes" vote would limit lenders to a maximum 28 percent rate, plus a $15 origination fee, on a two-week loan. The fee difference on a $300 loan is $45 versus $18.
The payday industry argues that it could not survive under the lower rate, putting 6,000 people out of work and closing off a vital credit option for people with nowhere else to turn. Payday opponents say the two-week loans trap too many borrowers in a cycle of debt in which they repeatedly need new loans to pay off old ones.
A wide-ranging coalition, including advocates for the poor and the homeless, the conservative Ohio Roundtable, the Ohio Farm Bureau, the United Methodist Church and the AARP, will fight the ballot issue. Republican legislative leaders and Democratic Gov. Ted Strickland also are urging a "yes" vote.
"The payday-lending industry brought on state regulations by failing to regulate itself," said David Zanotti, president and chief executive of the Ohio Roundtable. "Taking advantage of people in real financial need cannot be defended in the marketplace."
Even if payday lenders win on Nov. 4, some legislators already are saying they would take aim at the industry again when they return after the election.
Rep. Christopher R. Widener, R-Springfield, the sponsor of HB 545, and Sen. Jeff Jacobson, R-Vandalia, said they expect that many voters who would cast a "no" ballot on the issue in November would do so out of confusion rather than support for payday lenders.
"If the ballot language had listed 28 percent and 391 percent then I would say yes, the voters got a chance to look at this issue and decide on its face what they want," Widener said. But the ballot language, he said, is "not a fair test of what the issue is."
Jacobson said he expects that payday lenders will run deceptive ads.
"If they win by misleading voters, I think we'll have strong justification for revisiting the topic," he said. "If they argue that they should be allowed to screw over people every day of the year maybe then they can argue that people really do like them."
Meanwhile, the Department of Commerce will soon ask interim Attorney General Nancy H. Rogers to clarify regulatory issues related to the new payday law.
Because legislators never intended to have the check-cashing law remain in effect, HB 545 strikes several references to it in other sections of law. An analysis by the Legislative Service Commission found that the new law:
Strikes check-cashing licensees from the definition of "consumer finance company."
No longer carries a criminal penalty for payday lenders who violate the check-cashing lender law.
No longer gives the Department of Commerce authority to administer fees, charges, penalties and forfeitures collected from payday lenders.
source: http://www.dispatchpolitics.com/live/content/local_news/stories/2008/09/01/copy/payday01x.ART_ART_09-01-08_B1_99B6QRA.html?adsec=politics&sid=101
A key section of House Bill 545 is on hold because a payday-lending coalition filed more than 400,000 signatures with the Ohio secretary of state's office yesterday in its effort to qualify a referendum for the November ballot.
During the next three weeks, county elections boards will determine whether lenders have the 241,365 valid signatures they need.
A referendum at least temporarily prevents a law from taking effect. In this case, lenders are pushing for only a partial repeal of House Bill 545, targeting the section that would eliminate Ohio's check-cashing lender law and no longer allow lenders to charge a 391 percent annual interest rate.
While other parts of the bill, including a 28 percent interest rate and a limit on the number of loans per year, are technically in effect, they are largely meaningless. Payday lenders can continue business as usual unless their referendum is not certified for the ballot, or a majority of voters uphold the law in November.
"This effort was a great opportunity to hear from Ohioans, and it's clear from this massive number of signatures there is a strong sentiment among voters that politicians need to stop killing jobs and financial choices in the state," said Bridgette Roman, legal counsel for Dublin-based CheckSmart and a lead member of the payday coalition.
A "no" vote on the issue would allow lenders to continue charging a 391 percent annual interest rate ($15 per $100 on a two-week loan). A "yes" vote would limit lenders to a maximum 28 percent rate, plus a $15 origination fee, on a two-week loan. The fee difference on a $300 loan is $45 versus $18.
The payday industry argues that it could not survive under the lower rate, putting 6,000 people out of work and closing off a vital credit option for people with nowhere else to turn. Payday opponents say the two-week loans trap too many borrowers in a cycle of debt in which they repeatedly need new loans to pay off old ones.
A wide-ranging coalition, including advocates for the poor and the homeless, the conservative Ohio Roundtable, the Ohio Farm Bureau, the United Methodist Church and the AARP, will fight the ballot issue. Republican legislative leaders and Democratic Gov. Ted Strickland also are urging a "yes" vote.
"The payday-lending industry brought on state regulations by failing to regulate itself," said David Zanotti, president and chief executive of the Ohio Roundtable. "Taking advantage of people in real financial need cannot be defended in the marketplace."
Even if payday lenders win on Nov. 4, some legislators already are saying they would take aim at the industry again when they return after the election.
Rep. Christopher R. Widener, R-Springfield, the sponsor of HB 545, and Sen. Jeff Jacobson, R-Vandalia, said they expect that many voters who would cast a "no" ballot on the issue in November would do so out of confusion rather than support for payday lenders.
"If the ballot language had listed 28 percent and 391 percent then I would say yes, the voters got a chance to look at this issue and decide on its face what they want," Widener said. But the ballot language, he said, is "not a fair test of what the issue is."
Jacobson said he expects that payday lenders will run deceptive ads.
"If they win by misleading voters, I think we'll have strong justification for revisiting the topic," he said. "If they argue that they should be allowed to screw over people every day of the year maybe then they can argue that people really do like them."
Meanwhile, the Department of Commerce will soon ask interim Attorney General Nancy H. Rogers to clarify regulatory issues related to the new payday law.
Because legislators never intended to have the check-cashing law remain in effect, HB 545 strikes several references to it in other sections of law. An analysis by the Legislative Service Commission found that the new law:
Strikes check-cashing licensees from the definition of "consumer finance company."
No longer carries a criminal penalty for payday lenders who violate the check-cashing lender law.
No longer gives the Department of Commerce authority to administer fees, charges, penalties and forfeitures collected from payday lenders.
source: http://www.dispatchpolitics.com/live/content/local_news/stories/2008/09/01/copy/payday01x.ART_ART_09-01-08_B1_99B6QRA.html?adsec=politics&sid=101
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