COLUMBUS (WCMH) — When House Bill 123, a payday lending reform bill, passed through the Ohio House of Representatives supporters of the bill were able to celebrate for a brief time.
That time is over as State Senator Matt Huffman is positioning a potential amendment to the bill that would make it unrecognizable to the original content.
Huffman has been working on his plan since it became clear the bill would be coming to the Senate.
The original bill has had quite the controversial path so far, with some accusing former Speaker of the House Cliff Rosenberger of intentionally delaying the bill.
A protest at the statehouse last November forced the delays into the public eye and the bill seemed to get a jump start as a result.
Then, as it neared the end of its hearings in its House Committee there were rumblings that some in leadership wanted to amend the bill with ideas from the lending industry.
Discussions between the sponsors of the bill and the industry over a compromise seemed to be going nowhere at the time.
Then Rosenberger suddenly resigned citing an FBI inquiry that he needed to devote his full attention to.
That inquiry seems to have been upgraded into an investigation with FBI agents raiding his home, storage facility, and requesting documents here in the Capitol.
Some have tried to connect the investigation to overseas travel Rosenberger took with people associated with payday lending.
As his resignation was announced, the last minute attempt to amend the bill was scrapped in committee and the bill was sent to the full House as introduced.
The House overwhelmingly passed the bill and sent it to the Senate for them to deal with.
That brings us to this week when the bill’s sponsors Rep. Kyle Koehler and Rep. Michael Ashford testified in front of the Senate Finance Committee on the merits of their bill.
During that testimony, Koehler admitted he feared an attempt by Senators to usurp his bill and change it into something unrecognizable to the detriment of the people of Ohio and the benefit of payday lenders.
Two days later, supporters of the bill gave reason after reason why the bill should move forward as written and begged the committee not to alter the bill unnecessarily.
When they finished, Sen. Matt Huffman laid out the changes they feared.
Huffman’s proposals are still broad ideas with no concrete numbers associated with them yet and there are still some questions about what parts, if any of the original bill would survive an amendment he pens.
Supporters of the bill claim, like a lawyer trying to convince a jury of their client’s innocence, Huffman’s well practiced delivery of the changes his proposal would make are just window dressing to exactly what the payday lenders want; the appearance of reform without any.
“If the payday lending industry were to create a bill it would be the bill that senator Huffman just suggested,” said Carl Ruby with Ohioans for Payday Loan Reform.
Ruby says his group is ready to pursue a ballot initiative if Huffman’s changes are taken up by the Senate.
His suggestion that the payday lending industry played a large role in crafting Huffman’s proposals may not be as hyperbolic as you’d think.
According to Alex Horowitz with the Pew Charitable Trusts, while the bill was still in the House there were interested party meetings held.
“I was in those meetings and the payday lenders put forward many of [the ideas in Huffman’s plan] and suggested them to Speaker Rosenberger at the time,” said Horowitz.
Meanwhile, Huffman appears to be covering his backside as well.
He says that if his changes are rushed through there is a chance something could be missed that could lead to an unforeseen problem.
He also says that he isn’t sure that he will be able to provide a level of understanding to all of his colleagues before they may be called to vote on it, which he implies could be as soon as eight days.
It would not be the first time Sen. Huffman pulled a rabbit out of his hat and produced something in the 11th hour.
Earlier this year he did exactly that with congressional redistricting reform.
The big difference between payday lending reform and congressional redistricting is the two sides are nowhere near as close to coming to a deal, with calls made by critics Thursday to remove him from the process altogether.
There are serious concerns that Huffman’s proposal, which completely re-writes the bill, is being done as a way to poison the well, making any legislation the Senate passes unacceptable to House lawmakers.
Senator Jay Hottinger voiced his concern over the massive re-write by his fellow republican, pointing out the very short window of time they had to work through whatever Huffman puts in front of them.
Until we get concrete details of what Huffman is proposing it is difficult to compare and contrast the two versions of the bill.
There are some things that look like they would be good for consumer protections in Huffman’s proposal but until the numbers can be run, you can’t be sure.
And when it comes to running the numbers, Rep. Koehler had this to say about a meeting he had with Huffman about a week ago:
“We looked at two loans; his loan under his ideas, and my loan under House Bill 123; under House Bill 123 a $500 loan for 6 months had fees of $161, his example that he came up with was $813 in fees and interest,” said Koehler. “That’s totally unacceptable. That goes beyond the 50% limit that we’ve set in House Bill 123. So again, until there is something more concrete that I can look at, I’m not ready to substitute anything.”
Unfortunately, Koehler doesn’t get a say at least not at this stage.
All it will take for whatever Huffman comes up with to be submitted as a possible substitute to Koehler’s bill will be one member of the committee willing to offer it up.
It is looking more and more likely that member will be Senator Bill Coley who grilled supporters of the original bill all morning, and the sponsors at the previous hearing.
Coley went so far as to insinuate that the representative from the Pew Charitable Trusts was lying to him, by demanding the witness give Coley a reason to believe him when payday lenders have already told him something different.
The exchange came as Horowitz was attempting to explain to Coley that payday lenders use different levels of risk assessment for different kinds of loans.
For installment loans large corporate lenders will pull a person’s credit score as part of the risk assessment, but that doesn’t happen when someone seeks a payday loan. That is because repayment of the payday loan is connected to the borrower’s bank account, so fraud detection is more appropriate for the smaller dollar, and typically shorter timeframe, loans.
At the previous hearing on the bill, Coley told Koehler that they would have to agree to disagree that people were getting taken advantage of by the lenders currently operating in the State.
“I felt like he didn’t care,” said Mary Counter, a concerned citizen attending the hearing. “He talked about the old woman who had to get her kid out of jail; oh that’s just devastating. If it was me, I wouldn’t want to go and pay thousands and thousands of dollars to get the kid out of jail.”
Counter is referring to a hypothetical situation Coley offered up in seeking an explanation from the bill’s sponsors in which a woman was called in the middle of the night because her son had been arrested for a DUI and she needed to access money quickly and needs access to the current short term loan options.
Coley was trying to make a point that he believes the lenders who are threatening to leave the state if the bill passes, which in turn would leave that hypothetical mother without an option.
However, if she were forced to take that option, supporters of the bill point out that on a fixed income she may not be able to pay off anything more than the interest and fees on the loan and like many other real life examples given at the hearing, end up paying thousands and thousands of dollars in interest and fees to the lender because she was desperate and needed the money.
Some would say, that was the woman’s choice. Others would say, she should have read the fine print.
Koehler and Ashford want to make sure that if she chooses to get a loan she shouldn’t have to pay more than 5% of her monthly income and up to $20 in fees per month for up to 6 months.
Opponents of the bill say that’s too restrictive to lenders and unrealistic for many borrowers.
The bill could receive another hearing on Monday ahead of the last Senate Voting Session before summer break days later.