Lending bill needs reasonable compromise to protect consumers

Ted Saunders

For nearly a year, the Ohio Consumer Lenders Association (OCLA) worked in good faith with members of the Ohio legislature on a short-term lending bill that would strike a fair balance between strong consumer protections and preserving access to a diverse credit market.

The OCLA — a trade association representing hundreds of stores and more than 5,000 employees of the short-term lending industry — was immersed in “Interested Party” meetings, diligently negotiating with Ohio House leaders.

Tremendous strides and compromises were made on what was supposed to become an amended House Bill 123. Those included extended payment plans, longer minimum loan terms, financial education/literacy, fee caps and the elimination of single installment loans (i.e., “payday” loans.)

Ultimately excluded from the negotiations were out-of-state lenders — some licensed, some not — who were not OCLA members and who supported charging higher rates and offering products that the OCLA felt did not provide the consumer protections that are at the core of our organization’s mission and best practices.

It was an inspiring and thoughtful process based on the art of compromise that should be more prevalent in government. Yet, just as a House committee was poised to pass a sweeping reform bill that would have tightened regulations, offered new products, provided consumer protections and still maintained access-to-credit and short-term loans for millions of Ohio families, circumstances wholly outside of the process derailed it all.

The resignation of the former Speaker of the House and reported federal investigation are troubling and understandably distracting. But it hardly excuses members of a House committee for quickly passing an original concept bill, House Bill 123 – offered by out-of-state liberal interest groups — which will do little more than force short-term lenders out of business altogether and leave Ohio families with more expensive and less-regulated credit options.

It’s alarming when House leadership directs a House committee chairman, such as Rep. Lou Blessing (R-Colerain Township), to turn his back on a bill negotiated in good faith and with the support of members of his caucus and instead blithely muses that compromise work on the bill, or proposed changes, can be taken up in the Senate.

But that’s not how the legislative process works in the Ohio General Assembly. As the Cleveland Plain Dealer reported: “The suggestion that the Senate adopt changes to a bill that the House wants is highly unusual. Usually a chamber passes a bill in the version it wants because it doesn’t always have control over what occurs in the other chamber.”

The episode is a “slap in the face” to the Interested Party process and a mockery to the spirit and success of compromise legislating. Aspiring Speaker Ryan Smith (R-Gallipolis) went so far as to call the Interested Party process a “stall tactic and waste of time.” My hope is that if he is elected Speaker, he will not view this important forum as a waste.

The bill before the legislature as it now exists would put the vast majority of the one million Ohioans who currently utilize short-term lending at the mercy of unsafe, unregulated and illegal lenders, such as tribal and offshore lenders or worse yet, loan sharks.

And, one fact that can’t be overlooked is that this legislation will reduce any real access-to-credit options for the state’s “underbanked” or the 50 percent of Ohioans who are living paycheck-to-paycheck and occasionally find themselves in need of a short-term loan.

In addition, House Bill 123 as written would eliminate thousands of jobs while empowering a small group of outsiders who are pushing for so-called reforms and who are trying to tell Ohioans how to manage their own finances.

The OCLA is ready, willing and eager to resume negotiations toward a reasonable compromise bill that protects consumers from unfair treatment and high costs, but also protects them from misguided, short-sighted and politically expedient governmental regulation.

Ted Saunders

Ted Saunders is president of the Ohio Consumer Lenders Association (OCLA). He can be reached at tsaunders@ccfi.com.

Ted Saunders is president of the Ohio Consumer Lenders Association (OCLA). He can be reached at tsaunders@ccfi.com.