Banking Law

Over a year ago, Ohio legislators were busy "brain storming" ways to "close loopholes" they themselves created in state laws which purportedly tried to shut down payday lending in Ohio. According to one recent editorial in Columbus Business First, they're still hard at it and just as unsuccessfully as might be expected from these perennial "whack-a-mole" clowns. As we discussed a couple of years ago, payday lenders merely used other state laws to "work around" the initial payday lending restrictions. Notwithstanding last year's promises by some legislators to stop these "nefarious practices," no such thing has occurred. Nor, according to the editorial board of at least one Ohio business newspaper, is anything of the sort likely to ever occur.

State legislators found out that containing the flow of money is like trying to stop a pesky water leak. Compromised measures usually wind up only promoting patchwork repairs over and over. And the damage never gets contained. Which is where the Statehouse gang finds itself now ? struggling to complete a job that likely will never get finished as planned.

The Ohio House has passed additional regulations for payday shops, but backers acknowledge the rules have been weakened. The bill probably will bog down in the tougher Senate. Indeed, it may never see light again, depending on the results of the autumn election.

The payday industry might decry the latest House plan, but its protest isn?t so loud; it is as if the lenders know they are ultimately safe given the political realities at Capitol Square.

Lawmakers intent on protecting the public never closed the door to what they perceived as the threat. Instead their efforts ended up picking unintended winners and introduced a riskier environment for borrowers. It wasn?t their finest effort.