COLUMBUS — Ohio’s Republican-controlled Senate has toughened a proposed bill cracking down on the short-term lending industry and returned the measure to the House.
During a rare July session Tuesday, senators approved the bill, 21-9. Nine Republicans opposed restrictions tacked onto the legislation over the payday lending industry’s objections.
“I appreciate the thoughtful work of all those who participated in the deliberation of this bill to ensure loans are affordable by reducing the cost and enhancing consumer protections.” -Sen. Jay Hottinger (R-Newark)
“Today we stood up for the people and against the predators. We protected the needy as opposed to the greedy,” said Senator Tavares. “We have an obligation as representatives of the people to do what is fair, right and just for those we are elected to serve. The payday industry will still make substantial profits but we will be protecting consumers.”-Sen. Charleta B. Tavares (D-Columbus)
The Senate bill bars loans with terms of less than 30 days. Payments on loans of 90 days or less can’t exceed 7 percent of a borrower’s monthly net income, or 6 percent of the gross income, under the plan. Fees and interest can’t be more than 60 percent of the loan’s original principal amount.
The restrictions add to interest-rate caps and fee limits that cleared the House last month.
Ohio has some of the highest payday loan rates in the nation. Ohioans voted in 2008 to reform lending practices and regulations but a loophole in the law allowed lenders to avoid capped interest rates.
Under the bill, a borrower is prohibited from having more than $2,500 in total loans at one time.
The bill also permits borrowers to rescind a loan within 72 hours by returning the principal and prohibits harassing phone calls from lenders.
An FBI investigation is underway into former House Speaker Cliff Rosenberger’s possible acceptance of gifts from members of the payday lending industry.