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House hearing on Ohio payday loan reform bill draws dozens of notable

proponents from across the state with convincing testimony about why
Ohio’s payday loan law is broken
Columbus, OH— January 17, 2018 – Diverse proponents of payday lending reform from across Ohio today are
asking state leaders to act upon a bill that would protect Ohioans with reasonable, more affordable
loans. With the changes outlined in HB123, Ohio would no longer have the highest payday loan prices in the
U.S., Ohio families would save more than $75 million annually, and that money would stay in the local
economy.

This was the second hearing on the bill and the first opportunity for proponents, and others, to testify about
the bill, which was introduced in March 2017 and is currently before the House Government Accountability &
Oversight Committee, chaired by Representative Louis Blessing.

The bill (summary here: https://tinyurl.com/yc2wbq6e) would establish limits like the ones that were
overwhelmingly endorsed by Ohio voters in 2008. The payday lenders ignored the will of the people by finding
a loophole which allows them to charge Ohioans the highest rates in the nation ̶ a typical APR of 591%.

Testimony was submitted by individuals and organizations from around the state, including two borrowers,
businesses and other community advocates. Today, officials from an Ohio community bank and the state’s
largest credit union also testified that more lenders could offer loans under the provisions outlined in HB123 if
their financial institutions were permitted to offer such products, confirming such a business model would
work for them.

Here are some highlights from the testimony submitted:

Doug Fecher, Chief Executive Officer of Wright-Patt Credit Union

… “Wright-Patt Credit Union offers small-dollar, short term loans to its members through a program
called StretchPay. From this experience we’ve learned a thing or two about small dollar lending and
can confidently say that H.B. 123 is a necessary step forward precisely because it addresses two of the
most critical aspects of small dollar lending that harm consumers the most” he said, referring to
reasonable time to repay their loans and more reasonable payments.

Fecher said HB123 doesn’t add “excessive burdens to responsible lenders, thus encouraging
participation in the short-term loan market. Too often we’ve seen attempts to solve the problems of
predatory lending in ways that preclude responsible lending because of increased regulatory costs
beyond that which responsible lenders are able to absorb.”

Indeed, small dollar loans from responsible lenders must remain available in Ohio. The trick is to make
such loans affordable for consumers while allowing lenders a reasonable profit. HB 123 is a good bill. It
is a good policy. It will strengthen families in our state.
Carl F. Hughes, Executive Chairman, Fahey Bank, Marion, OH

“The sensible provisions contained in HB123 would reduce the threat of borrowers losing their
checking accounts because of payday loans, and would make it easier for banks, credit unions, and
responsible non-bank lenders to compete in the future. But with the few modifications outlined, the
policy outcome would be even more beneficial to consumers and the marketplace.”

Nick Bourke, Director of Consumer Finance, The Pew Charitable Trusts:

“I have studied payday loan markets in all 50 states for more than six years, and lenders list higher
prices in Ohio than in any other state in the country. Because lenders operate outside the statute the
legislature created for them, Ohio borrowers have the fewest protections in the country. At the same
time, there is no statute enabling lower-cost installment lending. This combination of the highest
prices, the fewest consumer protections, and the effective prohibition of competition from lower-cost
lenders combine to make Ohio’s small-loan market the most harmful in the United States.

One point of view is that payday loans are so damaging they should be eliminated…. Another point of
view, held by the six payday loan companies that control 90 percent of Ohio’s market today, is that
there is no problem with payday loans or Ohio’s payday loan law….

These views represent the polar opposites of this debate: either eliminate payday lending or do little
about it. But in between these extremes is the HB123 option: improve Ohio’s payday loan law to keep
access to credit, bolster competition, and improve outcomes for Ohio families.

This bill is earnest and well-thought-out. It is the best example of a workable compromise on the
payday loan issue that I have seen. HB 123 will save Ohio families more than $75 million each year.
Every day that passes without the enactment of HB 123 takes $200,000 from the pockets of Ohioans
who are payday loan borrowers.”

Danielle Sydnor, former licensed financial advisor and current chair of the Economic Development
Committee of the NAACP Cleveland Branch and chair of the advisory board for the Economic & Community
Development Institute in Cleveland.

“The Cleveland NAACP recognizes there are people in our community and communities across the
state who need access to small amounts of credit and there should be some mechanism in our state’s
law for getting it and regulating it. But right now, people who are getting loans through payday lenders
in Ohio are being taken advantage of in an unregulated environment with excessive interest rates.
Right now, payday lenders in Ohio are preying upon Ohioans in desperate circumstances.

House Bill 123 offers fair and reasonable reforms which mirror successful efforts that are working in
another state. Contrary to the payday lenders talking points, this bill would not cut off access to
credit. Payday lenders can still make plenty of money charging 28% interest and monthly fees, with
all-in APRs of 120%. Threating that these reforms will cut off access to credit or eliminate jobs is not
based in the evidence. These threats are scare tactics that the NAACP has heard before from this
industry and we won’t fall for it. This committee shouldn’t fall for it, either.”
David Thomas, Austinburg Township Fiscal Officer

“I’m here for the farmer, the store clerk, and the machine operator from my community who told me
they were too ashamed to speak publicly but wanted me to know something has to change.”

“In small towns, we support each other, which is why I am here today asking you to do what we at the
local level, what we in the religious community, what we in the private sector alone cannot do— reign
in the out of control 600% interest rate loans, enforce true competition among loan providers, and
give my constituents and neighbors the certainty they need to know that we in Ohio will not let our
friends and neighbors fall victim to predatory loan practices. HB 123 is that middle ground, market
based, consumer focused solution.”

Mike McDorman, President and CEO, Greater Springfield Chamber of Commerce

“When I’m driving a business executive through Springfield, trying to persuade him or her to bring
their company and jobs to our city, these payday loan storefronts paint a negative image of a poor, sad
town. It hurts my ability to attract more businesses to Springfield. But my disdain for the payday
lenders in Ohio goes way beyond image and bad aesthetics. I am ashamed that Ohio has the highest
rates in the nation for folks who use these short-term loans. Payday lenders in Ohio are operating in a
manner that is unfair and in a manner that hurts Ohians and— indeed— all of Ohio. And that
negatively affects our entire economy and everyone who lives in Ohio, and that includes our
businesses.”

“Passing HB 123 would save Ohians who use these loans an estimated $75 million annually. That
would be an annual economic shot in the arm for Ohio’s business community.”

Michal Marcus, HFLA of Northeast Ohio, Executive Director

“House Bill 123 is desperately needed to close the ‘credit services organization’ loophole and provide
protections for borrowers. Every day I see the benefits that credit can have in peoples’ lives, when
structured appropriately with sensible consumer protections— and every day I see the devastation
that the current loophole causes for hard working families that take out a first payday loan looking for
a lifeline but end up being drowned in debt. Fair financial tools for people to help themselves, such as
HFLA and the credit options that would be available under HB123 are critical to empowering our
community that is struggling to make ends meet.”

David Rothstein, an Ohio resident and long-time project director for financial inclusion
Programs who has researched small-dollar loans for more than a decade. Last year, he created a national
organization known as the Coalition for Safe Loan Alternatives

“The troubled history of payday (and auto-title lending) in Ohio demonstrates a legislative and market
failure that must be fixed…. In today’s virtually unregulated context, HB 123 is a step in the right
direction that is long overdue…

The promise of HB 123, which its predecessor bills have not done, will require that all loans are
structured with affordable payments and make it easier for lower-cost providers to compete in Ohio
on a level, transparent playing field.”
Pastor Derek Drewery, former payday loan borrower, senior pastor at New Day Christian Fellowship in
Springfield as well as a contractor and Air Force veteran:

“When I served in the Air Force from 1995 to 2001, I was stationed at Wright-Patterson Air Force Base.
During that time, money was tight. When I needed to pay for car repairs, I came up short, and so I
borrowed from a payday lender. I appreciated that they lent me money, but the payments were just
too large for me to pay back the loan and cover my bills. Instead, I could only afford to cover the loan
fee and buy more time. If I paid back the loan in full, there would have been such a large hole in my
paycheck that there was no way I could pay for even basic living expenses.

That’s how I ended up in a churning cycle, where I had to keep the loan out for one pay period after
another. I’ll never forget that process of being stuck on the treadmill, where I didn’t have a way out of
the loan. The experience was one that broke me financially and emotionally. The Air Force doesn’t
take these things lightly, and it’s easy to get in serious trouble with your first sergeant if you don’t pay
back a loan. And besides that, the lender could just take the money out of my checking account
anyway, because that was a condition of getting the loan. I cut back on everything and started eating
less to try and get that loan paid back and be done with it. When I couldn’t afford food for my dog, and
I was down to my last box of Cheerios, I ended up getting some help from family to get out of it. By the
time, I had paid back a few thousand dollars to borrow what was originally around $700.”

Sheri Dozier, Director of Economic Opportunity, Cleveland Neighborhood Progress:

“House Bill 123 offers fair and reasonable reforms which mirror successful efforts that are working in
another state. Contrary to the payday lenders talking points, this bill would not cut off access to
credit. Payday lenders can still make plenty of money charging 28% interest and monthly fees, with
all-in APRs of 120%. Threatening that these reforms will cut off access to credit or eliminate jobs is not
based in the evidence.”

Copies of full testimony are available if interested. Please email nlesic@lesiccamper.com or
boconnell@lesiccamper.com

More information available at www.ohioansforpaydayloanreform.com.