CUYAHOGA FALLS -- City Council unanimously approved legislation backing a bill to put a limit on interest charged by payday lenders.
The resolution passed by Council expresses support of Ohio House Bill 123 which would "close an existing loophole and cap the annual interest rate for payday loan lenders," according to the piece's language. The resolution is also intended to urge the state legislature and Gov. John Kasich to support HB 123.
"I want to thank the administration and members of Council for standing against greed and usury that enslaves many of our citizens," Councilman Vic Pallotta (R-3) remarked prior to voting.
Jerry James (D-7), in turn, said, "I just want to once again thank Mr. Pallotta for all of his efforts in this. He spearheaded this awhile back and we've supported him all this while."
Initially, the resolution was presented by the administration and Pallotta. Following its introduction on April 10, the other 10 members of Council added their names as sponsors.
Ohio payday loan rates average an annual interest rate of 591 percent and a resident who has a $300 payday loan out for five months must pay back more than double the amount ($680) in interest and fees alone, according to the resolution.
Despite the fact the Ohio General Assembly passed legislation in 2008 capping payday lending rates at 28 percent, payday lending companies have utilized a loophole under Ohio's Mortgage Loan Act for several years enabling them to continue charging extremely high interest rates, the resolution states.
Introduced March 9, 2017 in a bipartisan manner by Representative Michael Ashford (D-44) and Representative Kyle Kochler (R-79), HB 123 would amend the Ohio Mortgage Loan act and set limits on the annual interest rate payday lenders can charge at 28 percent and also ensures monthly payments do not exceed 5 percent of a borrower's gross monthly income.
Pallotta said Webster's Dictionary defines "usury" as "the extraordinary loan fees and interest rates charged in a lending situation." Those borrowing from payday lenders become "enslaved," he said. "They find themselves scrambling trying to pay it off and then other charges come up," said Pallotta.
During the April 17 Council committee meeting, Jeff Wilhite, a Summit County Councilman, spoke in favor of the resolution. Wilhite is the director of Family Promise, a non-profit organization that works with families to prevent or remedy homelessness. He described homelessness as situational and not generational.
"They find themselves in a position where they need to make ends meet and a payday lender is a quick fix," he said. "They will seek a loan under a circumstance -- in a family emergency or dire strait -- that drives them to these unconventional loans."
Wilhite told about a woman who borrowed money against her car, which she was living in at the time. The woman continued to work and make payments until one week her check was late and she missed a payment by a day. The lender increased her loan's interest rate from 300 to 500 percent. Family Promise was able to help the woman, Wilhite said.
"Homelessness is not the wino under the bridge," he said. "It could be the person next to you getting gas." Wilhite credited Pallotta, Council and the city for being "ahead of the game."
According to Pallotta, Wilhite initiated a resolution similar to Cuyahoga Falls' at Summit County Council, and it passed unanimously. Akron City Council also approved supporting HB 123. In 2010, Pallotta said, Falls City Council approved legislation presented by At-Large Councilwoman Carol Klinger (R) that limits the number of payday lenders in the city to five.
"The city has had the foresight to jump ahead of this thing," Pallotta said.
Mary Nichols-Rhodes (D-4) commended Pallotta saying she believes the payday loans problem is far-reaching. "It's a lot of people, not just homeless people," she said. "I think it's more common than people think."
"Most of us in Cuyahoga Falls are comfortable and this hasn't touched our lives," said President Mary Ellen Pyke (R-2). "This legislation need[ed] to pass, and we need to look out for each other."