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Dreher Tomkies LLP
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OHIO HOUSE OF REPRESENTATIVES COMMITTEE VOTES ON HOUSE BILL NO. 486

On May 11, 2010 the Ohio House of Representatives Consumer Affairs and Economic Protection Committee held a third hearing on House Bill No. 486 and, at the close of the hearing, voted on amendments to House Bill No. 486 and then voted on the Bill itself. Before the vote, the Committee heard testimony from two owners of small loan stores, the chairman of the Ohio Coalition of Concerned Black Citizens, a lecturer in the finance department of The Ohio State University and a lobbyist for the small loan industry.

The owners of the small loan stores testified that the passage of House Bill No. 486 would make it impossible for them to continue operating, and that they would lose their life savings and everything that they had put into their businesses. Anne Burton, a franchise owner of a Cash Plus location, stressed that she offers an extended payment plan to customers who need it and uses strict underwriting criteria to avoid lending to customers who cannot afford to repay their loans. Ashish Gandhi, also an owner of a Cash Plus store, pointed out that Ohio has the lowest cost short-term loans in the nation. He also stressed that he and other small loan lenders are abiding by current laws, and that it would be “un-American” for the legislature to create a law making it impossible for him to operate.

John T. Coats, the chairman of the Ohio Coalition of Concerned Black Citizens, testified that, for some people, cash is not easily borrowed from friends or family and that these same people may not qualify for bank credit. He emphasized that there is a need for small loan lenders because bank products, such as overdraft protection, can be more expensive. When Mr. Coats was being questioned, Representative Coley opined that if legislators were truly interesting in helping people, they would put forth a new model under which people can get access to credit.

Dan Ogilvy, a senior lecturer in the finance department of the Ohio State University, testified that House Bill No. 486 would kill jobs and reduce Ohio’s tax revenues by putting lenders out of business. He stated that legislators are incorrectly relying on the APR as a true measure of a business’ profitability, rather than looking at the modest profits actually made by small loan lenders.

John Rabenold, a lobbyist for Access Financial, proposed that the legislature work with lenders to create a new model. He testified that Ohio is not an attractive market for financial services because of legislation such as House Bill No. 486. He also pointed out that 486 will cost Ohio jobs and make consumers susceptible to more costly lending. During questioning, Representative Colely mentioned a proposed installment loan bill, and Mr. Rabenold said he would like to work with legislators on developing such a bill.

After testimony, the Committee voted on two amendments to the Bill, one of which passed. It then voted, on party lines, to pass the Bill out of committee. We will provide you with a copy of the amendment as soon as we are able to obtain it.

  • Darrell Dreher and Elizabeth Anstaett