Ohio Payday Lender Interest Rate Cap, Issue 5 (2008)
|Ohio Issue 5 (2008)|
Text of measure
The language that appeared on the ballot:
REFERENDUM ON LEGISLATUOON MAKING CHANGES TO CHECK CASHING LENDING, SOMETIMES KNOWN AS "PAYDAY LENDING," FEES, INTEREST RATES AND PRACTICES
Substitute House Bill 545 (H.B. 545), which was passed by the Ohio legislature and signed into law by the Governor, substantially changed the law regulating how certain lenders in Ohio operate. Under the referendum, voters must decide whether Section 3 of H.B. 545 should go into effect. Section 3 of H.B. 545 deletes the old provisions of the law regulating check cashing lenders, sometimes known as “payday lenders,” in favor of the new provisions.
1. If a majority of Ohio voters approve Section 3 of H.B. 545, all short term lenders, including check cashing lenders, would be subject to the following limitations:
2. If a majority of Ohio voters reject Section 3 of H.B. 545, check cashing lenders would be allowed to continue under previous law as follows:
A majority YES vote is required for the amendment to be adopted.
HB 545 was approved by state lawmakers and the governor in late spring. Opponents of the new restrictions (mostly the payday lending industry) quickly moved to try to overturn it using Ohio's veto referendum process.
The payday lending industry is an $85 billion industry that provides short-term loans, which are usually secured with a check postdated to the borrower's next payday. The interest rate in the absence of regulation has typically worked out to an average of $15 per $100 borrowed on a two-week loan. The high interest rates are what has led to legislative attempts to cap those rates. In fifteen states, the practice was illegal by 2008.
Due to winning a recent battle over the ballot language, the referendum that was presented to voters on the November ballot contained no mention of a 391 percent interest rate many payday lenders charged. Instead, it told voters that if they reject a portion of the law restricting the industry, payday lenders would be able to charge rates and fees that "substantially exceed" a 28 percent annual rate.
State Rep. Christopher Widener, R-Springfield, supported HB 545, saying "I designed House Bill 545 to protect Ohioans from a dangerous product that has been sold at an egregious price. Sadly, the REJECT House Bill 545 Committee would prefer to prey on Ohio consumers than agree to the terms of the new legislation."
Arguments in favor
The following reasons were given in support of Issue 5 by a committee appointed by the Ohio Ballot Board:
|“|| Is 391% interest too high? YES.
A yes vote caps the annual interest on a payday loan at 28%. Payday lenders don’t like the interest rate cap. They want to charge 391% APR on a typical two-week loan. That’s why the national payday lending lobby spent millions on misleading TV ads and petition circulators to get Issue 5 on the ballot.
Here’s what a Yes vote on Issue 5 does:
Here’s what a YES vote does NOT do:
Reckless lending hurts more than unsteady borrowers. It puts a strain on our charities, increases demand for social services and undermines families and communities.
Ohio has one of the best payday lending reform laws on the books!
Please vote Yes on Issue 5 and Keep Ohio’s payday lending reforms.
The official ballot argument in support of Issue 5 was signed by the mayor of Columbus Michael B. Coleman, Philip E. Cole, Lisa Hamler-Fugitt, Bruce R. Ough, and E.J. Thomas.
Reject House Bill 545 and Ohioans for Financial Freedom were the names of groups supporting repeal of HB 545; these groups were mostly composed of those in the payday loan business.
A letter from one payday loan operator to the people of Ohio surfaced quickly after the interest rate cap was passed to give people a different view of an industry that by some is considered cruel and seen as taking advantage of their customers: 
|“||"Some [customers] are shocked, some are mad and some are upset because not only do they depend on us, but they also have formed a great friendship with my employees and me. Oh, yes, did I also mention that I recently gave money to three individuals, out of my pocket, because they needed a little to hold them over until payday? Yes, we payday lenders really do such things. My customers will have nowhere to go unless our legislators are going to make these short-term loans.||”|
Organizations that supported repealing HB 545 include:
- Call & Post, Ohio’s largest African-American newspaper
- CORE (Congress of Racial Equality)
- C.O.A.S.T.(Coalition Opposed to Additional Spending and Taxes)
- The Ohio Chamber of Commerce
- The Ohio Grocers’ Association
- The Ohio Christian Alliance
- The National Taxpayers Union (NTU)
Near the end of the campaign, financial newspapers reported that Advance America, one of the payday lenders that would be affected by the measure, stood to lose $42 million if forced to close its centers in Ohio.
The following reasons were given in opposition of Issue 5 by the Committee to Reject H.B. 545:
|“|| If approved Issue 5 would:
Why you should vote no on Issue 5:
Hardworking families make difficult financial choices everyday. Taking a legitimate credit option from them, especially when they have an emergency or an unexpected need, will result in greater financial hardship.
Ohioans deserve the freedom to make their own financial decisions - it should be an individual’s choice on which lending option to use, not a politician’s.
Payday advances are a sensible credit option. They cost only $15.00 per $100 borrowed. By comparison, banks charge $29.00 for overdrafts and $37.00 for late fees on credit cards. Other fees can be as high as $57.00.
Vote no on Issue 5, to preserve a short-term loan option that is simple, reliable, and confidential - and often the cheapest available.
Vote no on Issue 5, to ensure that those who need short-term financial help will have a choice.
Vote no on Issue 5, to guarantee your right to access practical credit.
By voting no on Issue 5, you will preserve the jobs of thousand of employees within the financial services sector. In Ohio’s difficult economy, further job losses should be avoided, particularly good jobs - with competitive salaries and benefits.
Vote no on Issue 5, to preserve financial choices; confidentiality and privacy in personal borrowing; and, the retention of up to 6,000 jobs for Ohio workers.
The official ballot argument in opposition of Issue 5 was signed by Stephen J. Schaller, Robert M. Greiser, and Bridgette C. Roman.
- Ohio 2008 ballot measures
- 2008 ballot measures
- List of Ohio ballot measures
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- Ohio ballot measures and election results
- A History of Statewide Issue Votes in Ohio
- Ohio 2008 ballot measure voter's guide
- ↑ Ohio Secretary of State, "2008 Official Election Results," accessed July 30, 2013
- ↑ Ohio Secretary of State, "A History of Statewide Issue Votes in Ohio," accessed July 30, 2013
- ↑ 3.0 3.1 3.2 Ohio Issues Report, "State Issues Ballot Information for the November 4, 2008 General Election," accessed July 30, 2013
- ↑ Wall Street Journal, "Payday Lenders Back Measures to Unwind State Restrictions", October 28, 2008
- ↑ Cincinnati.com: "$1 for petition signatures alleged", August 12, 2008
- ↑ Blog.Dispatch.com: "Petition language fight kicks off payday ballot battle", The Post Dispatch: The Daily Briefing, June 18, 2008
- ↑ Payday Pundit News, "More from Ohio payday lenders," June 5, 2008
- ↑ RTO Online, "Advance America Could Take $42 Million Hit if Forced to Close Ohio Centers", October 30, 2008
- ↑ Columbus Dispatch, "2 ballot issues cost $82 million", December 13, 2008
- ↑ Dayton Daily News, "More than $60 million spent on casino, payday lending issues", October 23, 2008