We need payday loan reform now

Tom Stephenson - Guest columnist

I gathered with a group of Clinton County clergy and elected officials last October for a meeting with Speaker of the Ohio House Cliff Rosenberger to discuss the urgent need for payday lending reform. He informed our group the he was committed to addressing the predatory practices of this industry which can charge consumers up to 591 percent in interest and fees!

We shared the ways in which abusive, unaffordable loans severely damage the finances and lives of our congregants and fellow community members. The moment from the meeting that I recall most vividly is when Speaker Rosenberger said that 28 percent interest is “by the way still very high,” referring to the rate cap that was passed by the Ohio legislature and approved by Ohio voters in 2008.

The problem is payday lending companies that operate in Ohio have never followed that law. They found a loophole and are now licensed as “credit services organizations,” which means they can charge borrowers unlimited fees. This has led to Ohioans being charged prices that are four times higher than in other states. This is unconscionable and it erodes trust in our state government.

I was hopeful that Speaker Rosenberger was serious about fixing these broken state laws, putting these lenders on notice, and bringing real relief for borrowers who are, most typically, the working poor. I shared the story of one member of my congregation who was trapped in a perpetual cycle of debt, taking out one loan to pay off the next, until they had paid much more in fees than they borrowed in the first place.

When I attended a hearing on the bill in January 2018 at the statehouse, I heard similar stories from fellow clergy, civil rights groups, borrowers, and business leaders who see the devastating effects of these loans. All were testifying in support of House Bill 123, a bipartisan bill that will ensure borrowers have access to affordable loans when they need them but prevents lenders from trapping borrowers in debt.

Seeing the broad support for the bill from across the state on display gave me more hope that Speaker Rosenberger was going to have the political and moral courage to lead on the issue. So I was deeply disappointed to read the latest reports that Ohio House leadership is proposing to gut the bipartisan bill with sensible consumer protections and replace it with proposals that favor the payday lenders.

This means that the legislature would fail to close the loophole that lenders use today, ignore the reasonable 28 percent rate cap called for by HB 123, and instead allow for loans with annual percentage rates of 300 percent and higher. That would mean a borrower would repay over $3,500 for a $1,000 loan.

This is exactly the type of usury and greed the Scriptures condemn. I am grieved, as are many of my colleagues in this community, that this deplorable practice is permitted. If Speaker Rosenberger believes that 28 percent interest is “still very high”, why would he give his blessing to loans with 300 percent interest?

It is my prayer that Rep. Rosenberger and his colleagues in the House will intentionally and prayerfully reflect on the struggles of their fellow Ohio citizens who deserve better safeguards. Our elected officials need a clear vision to overcome the influence of a small group of companies (most of which are not even based in this state) that have exploited Ohio’s broken laws in order to prey on hard-working families.

I have congregants and neighbors who are struggling now and will continue to struggle if real reform is not enacted. Please join me in calling Rep. Rosenberger’s office in Columbus or speak to him when you see him in our community and respectfully urge that he and his colleagues adopt – and not gut – bipartisan House Bill 123 so that the loopholes are closed, and borrowers are protected once and for all.

This is what the Gospel, and a just society, call for.

Act now.

Pastor Tom Stephenson


Tom Stephenson

Guest columnist