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Payday lenders' lobbyists are swarming the Ohio Statehouse, defending consumers' "right" to pay a $15 fee for a $100 loan. Yes, that's 391 percent interest on an annualized basis.

Ohioans appear unpersuaded.

A poll commissioned by the Service Employees International Union shows the vast majority of Ohioans have a negative view of payday lending and would like to see a crackdown on the industry.

So who, besides legislators, have those lobbyists been talking to? Industry representatives told Plain Dealer editors and reporters last week that consumers are 100 percent happy with payday lenders, and think the fees are just dandy.

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NOW that the Ohio House has - at long last - taken steps to rein in legalized loan-sharking, state senators should ignore pressure and protests from those who profiteer from the poor and act quickly to endorse payday-lending restrictions.

House Bill 545, passed by a bipartisan 68-26 vote, would cap annual interest on payday loans at 28 percent. Currently, interest and fees can run as high as an annual rate of 391 percent. The legislation also would establish a minimum 31-day loan period, limit customers to four loans in 12 months, and prohibit loan-initiation fees.

About 2,500 supporters of the Ohio companies that feed off financial misfortune by charging sky-high interest rates for short-term loans rallied on the Statehouse lawn last Tuesday in an attempt to pressure the state Senate to reject House Bill 545.

At the same time, one of their opponents, the Ohio Coalition for Responsible Lending, reported that payday lenders are pushing an amendment that would keep the 28 percent cap but allow fees of up to $13 per $100 borrowed, effectively pushing the interest rate back up to 367 percent on a $300 loan.

Payday industry backers claim the interest-rate cap would put Ohio's 1,600 stores out of business and 6,000 Ohioans out of work. To that we say good riddance. The state, as well as the people suckered into using their services, will be better off.

It is no accident that at a time when most Ohio businesses and many of its residents are hurting, cash-advance outfits are thriving. As we noted a year ago, the watchdog groups Policy Matters Ohio and Housing Research and Advocacy Center reported that check-cashing and payday-loan outlets have been growing like a plague in Ohio for a decade, and they now outnumber the three most-popular fast-food restaurants combined.

These parasites line their pockets off people caught in the economic downturn. The worse the economy, the better they do, especially among those living paycheck to paycheck. Borrowers who can't repay their loan in the short repayment period - typically two weeks - have to roll the loan over, taking out a second loan to pay the first loan, interest, and fees. That puts them deeper in debt, making it more likely that they'll have to repeat the cycle in another two weeks.

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The bill to tighten regulations on payday lending in Ohio is encountering rough waters in the Senate. The resistance is not surprising. The legislation, which was approved by the House in April, delivered a package of tough reforms, a stunning reversal by a Republican-led House that had stalled an earlier proposal.

There was good reason for the turnaround. Ohio consumers will be better protected if the Senate backs up the House in controlling lending practices that trap many residents in a cycle of borrowing and debt. The bill attempts to address a range of complaints, from the high rates charged on payday loans to irresponsible policies such as not verifying the ability of customers to repay loans.

The payday lenders argue that the industry has been caught up unfairly in the national furor over subprime lending. Perhaps so. The larger point is the unfolding crisis has sensitized both the public and policymakers to the broader consequences of continued lax regulation of the lending industry, be it for mortgages or payday loans, for debt-ridden consumers and communities as a whole.

The House legislation would place a 28 percent APR cap on payday loans, steeply reducing the current rate, $15 on a $100 two-week loan, which amounts to 391 percent APR. The proposed rate cut is severe, going lower than the 36 percent limit that Congress imposed on loans to military families.

The lenders have balked at any cap at all, contending anything less than the current rate would force them to pull out of Ohio. The question the Senate must resolve is what cap would be fair to consumers who already are financially stretched and reasonable to support an industry that is legal in Ohio and employs 6,000 people, by the operators' count.

The concern with payday lending goes beyond the question of rate caps. It also involves expanding the options for small, short-term loans. Payday operators point out, correctly, that they have flourished in Ohio because they meet needs other financial institutions are not eager to fill. They argue that the majority of their clients use the services responsibly and that available alternatives are much worse for those who need a loan to take care of an emergency and end up overdrawing their bank or credit account, bouncing a check or paying their bills late.

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The Republican-controlled Ohio House last week passed even tougher payday lending regulations than even a coalition of consumer advocates, religious and social groups was pushing for. As the debate now heats up in the Senate, here's a look at the surprising journey of the bill:

A key part of the payday lending debate has been whether to lower the current 391-percent interest rate ($15 per $100 borrowed on a two-week loan). Had you asked most observers a few weeks ago to gauge support of a 36-percent interest rate cap (much less 28 percent) among members of the House Financial Institutions Committee, the answer would have been "weak."

Based on discussions with members and listening to questions during hours of testimony, out of 12 committee Republicans, it looked like one supported the cap (Rep. William G. Batchelder, sponsor of the 36-percent bill), one was leaning in opposition, eight opposed it, and two were unknown. Of the 11 Democrats, it appeared five supported it and one opposed it, while the rest were a mystery. Payday lending advocates were talking confidently that the dreaded rate cap was bottled up and going nowhere.

Even when House Speaker Jon Husted, R-Kettering, told reporters on April 9 that he sensed growing support in his caucus for a rate cap, the mood didn't seem to shift. Told of Husted's comments, Christopher R. Widener, a Springfield Republican and chairman of the House Financial Institutions Committee, said he was getting a different reading. "Most of the members that I talked to do not want to eliminate this business, and they believe a 36 percent rate cap does that," he said.

But Husted, one of the sharpest political minds in the Statehouse, doesn't just say things to the press for the heck of it. It's unclear how much support for a cap there was at the time among Republicans. Here's what we do know: his comments came a day after surprising revelations that House Minority Leader Joyce Beatty's husband, Otto, was lobbying for payday lending giant CheckSmart, sending shockwaves through a Democratic caucus struggling to find a position on the payday issue. It also marked the first time he talked about a rate cap as a possibility -- and not a begrudging one. "I think as people are starting to really get focused on it and learn more, they think there needs to be a definitive cap of some type," he said.

However, nine days later, Widener again questioned the need to lower the 391 percent payday interest rate (he called it a "fictitious number") and said he was crafting a bill that would toughen regulations without a rate cap. Sure enough, Widener, who said he believed that payday loans pulled borrowers into a debt trap, rolled out a proposal that would leave the current interest rate in place but make some other changes, such as limiting loans to two at a time and allowing people to ask for 60-day payment extensions. Before long, both sides were ripping it. Payday lobbyists said it could kill the industry slowly. The Coalition for Responsible Lending said it didn't go far enough, using methods that had been tried and failed in other states.

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Ohio is poised to enact toughest legislation to regulate the interest rates charged by payday lenders. Not surprisingly, payday lenders are complaining that the legislation capping interest would force them out of business. Are we supposed to be upset about that? This is an industry that preys on people at their most desperate and vulnerable. Offering credit on awful terms to unqualified borrowers is the very definition of predatory lending. The predators should be stopped, and the Ohio legislature has the perfect opportunity to stop them.

According to the Ohio Office of Consumer Affairs, payday lenders can make loans of up to $800 with a "loan origination fee" that ranges from 10 percent of the first $500 borrowed to 7.5 percent for amounts over that, in addition to interest at a rate of 5 percent per month or partial month. At the end of two weeks, it would cost the borrower $912.50 to repay a loan of $800. The shocking truth is that at these rates, payday lenders can charge borrowers an annual interest rate of 391 percent. Many have noted that even loan sharks don't charge rates that high.

The people who seek payday loans are generally in extremely bad financial shape. Payday lenders often do not require a credit check. No responsible lender would lend to many of these borrowers. In addition to their poor financial credentials, many payday borrowers are vulnerable for other reasons such as precarious employment situations or employment that fails to pay a living wage. The Center for Responsible Lending notes that minority and female borrowers take out a disproportionately high number of payday loans, as do members of the military.

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Responding to concerns that payday lending practices trap many Ohio consumers in a "cycle of debt," the state House last week passed a strict reform measure that would cap the fees these lenders can charge - so drastically, industry executives say, that they will be forced to close their 1,600 Ohio stores and put 6,000 employees out of work.

Perhaps. If so, nobody wants to see people lose their jobs. But the larger issue is how we deal with a growing crisis - our piling up debt and failing to save money.

Payday lending enables bad practices. The Senate should pass a strong reform, but it should also make sure the market can offer options for well-regulated, low-cost, short-term loans.

In Ohio, Kentucky and 36 other states, consumers can take out these two-week loans for a fee - in Ohio, $15 per $100 borrowed, which critics say amounts to a 391 percent annual percentage rate (APR).

The House's unexpectedly tough reform sets a 28 percent APR cap on loans, bars additional fees, and limits the number and size of loans a consumer can take out. Good. There's a legitimate need for these loans, but not when the loan terms outstrip borrowers' ability to repay.

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Ohioans should give House Speaker Jon Husted of Dayton and fellow Republican Rep. Christopher Widener of Springfield three cheers - even an ovation - for standing up to payday lenders' gouging.

True, there's many a slip between cup and lip, especially on Capitol Square in Columbus. Brass-knuckle lobbying by payday lenders moves now to the state Senate. But change is in the air as to payday lending, and none too soon as a souring economy slaps more Ohioans around.

As a 1995 Ohio law now reads - a law so smelly then-Gov. George V. Voinovich, a Cleveland Republican, let it go on the books without his signature - payday lenders may crush Ohioans with an annual percentage rate of 391 percent on the money they borrow. Widener's bill, which passed because Husted made it happen, would push down the maximum payday-loan APR to 28 percent. That's even better than the 36 percent consumer advocates prayed for.

Husted built a cross-party loan- reform coalition ranging from conservative-when-it-wasn't-cool Medina Republican William Batchelder, to liberal Youngstown Democrat Robert Hagan, to Rep. Tyrone Yates, a key black Democrat from Cincinnati.

Widener, meanwhile, who as recently as last weekend would have left a 391 percent APR ceiling in place in Ohio, took a second look. In politics, modifying a stance can take more guts than standing pat. Widener deserves full credit for stepping up.

In Wednesday's critical vote, Husted, Widener and 27 other Republicans joined with 40 Democrats to send the Ohio Senate Widener's reform bill. Voting "no" - to put it plainly, voting against Ohio consumers - were 21 Republicans and Democratic Reps. Eugene Miller of Cleveland, Kenny Yuko of Richmond Heights, Katherine Chandler of Kent, Fred Strahorn of Dayton and John Domenick of the Steubenville area. (The one Northeast Ohio Republican to vote against borrowers was Rep. John Hagan of Alliance.)

Now the Ohio Senate, also Republican-run, must pass Widener's plan before Democratic Gov. Ted Strickland, a supporter of payday lending reform, can sign it.

On that front:

A political action committee related to Advance America Cash Advance Centers Inc., a company that as of December had 244 Ohio payday lending storefronts, donated $2,000 last June to the Ohio Senate Republican Campaign Committee.

The sponsor of the 1995 payday lending law - the one that lets payday lenders charge Ohioans a 391 percent APR - is state Sen. Robert Schuler, a Cincinnati Republican.

The Wall Street Journal reported Thursday that, in another example of payday lenders' bullying, Rent-a-Center Inc. successfully threatened the Ohio Association of Second Harvest Foodbanks for endorsing payday lending reform.

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A group of Ohio foodbanks withdrew from a coalition fighting to reduce payday lending rates after a lender threatened to redirect donations.

The Ohio Association of Second Harvest Foodbanks, a network of 10 independent foodbanks statewide, pulled out of the Ohio Coalition for Responsible Lending, which has worked to cap interest rates on short-term loans.

Officials from Rent-a-Center Inc., which also owns Cash AdvantEdge, a payday lending business, threatened to pull a portion of a $500,000, four-year pledge that it made to a national group that ships food to the individual centers.

Gus Whitcomb, spokesman for Rent-a-Center, said the company's decision to pull donations had nothing to do with the Ohio network's work with the coalition. He said Rent-a-Center's money was to be used only for hunger issues and nothing else.

"We signed up to fight hunger," Whitcomb said. "We don't want our money to be diverted to other causes."

But Ross Fraser, spokesman for America's Second Harvest in Chicago, first heard of the issue after getting a call from Rent-a-Center officials saying that the Ohio association had come out against high-interest rates at payday lenders.

Fraser said that the 10 Ohio foodbanks do not get money directly from the Rent-a-Center donation but that the money is used to package and transport food across the country. The Chicago group did not pressure the Ohio association to remove itself from the coalition, Fraser said.

The Ohio association itself does not get donations from America's Second Harvest, but food shipments are sent directly to the 10 separate foodbanks, said chairwoman Anne Goodman.

Goodman said the association was not pressured to pull out of the Ohio Coalition for Responsible Lending.

She would not discuss who put the group's name on the coalition's Web site.

Association board members did not join the coalition and she said she had no idea that the organization was listed on the coalition's Web site as a member. But in an e-mail, Goodman said the association is pleased with the legislation regarding payday lending.

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Melissa Lutz has an uneasy feeling she's well on her way to being out of a job.

But her chief concern, she said, lies not with her own future, but rather with those of her customers, who might have nowhere to turn if her business goes under.

A 20-year veteran of the payday lending business, Lutz, owner of Fast Check Cash Advance in Newark, is in the process of trying to explain to her customers that a piece of legislation passed this week in the Ohio House of Representatives essentially will force her to close her doors.

"We have a lot of customers that are going to have nowhere to go to get short-term loans," she said. "If our legislature will look at other states that have (capped lending rates) ... the people in that state are worse afterwards than they are before."

One of the nation's strictest proposed crackdowns on payday lending cleared the Ohio House on Wednesday and is headed to the Senate for consideration.

Ohio House Bill 545, which passed 68-26, slashes customer charges to a fraction of their current rates and limits borrowers to four short-term loans per year.

Fast Check Cash Advance, like most payday lending establishments, charges $15 for every $100 borrowed on a two-week loan, equivalent to a 391 percent annual interest rate.

Under the bill's proposed 28 percent annual interest rate, borrowers would owe a couple of dollars for every $100 borrowed and would have a minimum of 31 days to repay loans.

Supporters of the bill say the protection it would offer to consumers would outweigh the job losses if the industry -- consisting of more than 1,600 establishments in the state -- were to shut down.

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The Ohio Association of Second Harvest Food Banks withdrew from a fight for tougher payday loan regulations after being pressured by a national payday company that gave $500,000 to its parent organization.

Rent-A-Center, a Texas-based rent-to-own company that also offers payday loans, complained after learning that the food bank group was a member of the Ohio Coalition for Responsible Lending. A Second Harvest official agreed last week to drop out of the group.

"I think it's outrageous that Rent-A-Centers that do payday lending would coerce a charity to essentially back their political line," said Bill Faith, a leader in the Ohio Coalition for Responsible Lending.

"To get them off of our coalition doesn't help the industry one bit. It just makes them look like the idiots they are."

The coalition has been a leading supporter of a bill passed Wednesday by the Ohio House that would cap payday interest rates at 28 percent, prevent loan terms of less than 31 days and limit borrowers to four loans per year. Industry officials say that, if enacted, the bill would quickly put them out of business.

Last month, Rent-A-Center officials called the Chicago-based America's Second Harvest, the nation's largest hunger-relief organization, after learning that the Ohio association of food banks was a member of the coalition supporting the payday loan restrictions, said Ross Fraser, spokesman for Second Harvest.

The rental company opposes the Ohio legislation and was concerned that its donation to America's Second Harvest was being used to work against them, Fraser said.

But it wasn't. The donation was being used by the national group for operating expenses and was not passed through to the state association, which operates independently, Fraser said. The Ohio Association of Second Harvest Food Banks has never received a donation from Rent-A-Center.

Nonetheless, Fraser said Rent-A-Center officials were referred to Anne Goodman, who runs the Cleveland Food Bank. She also sits on the boards of both America's Second Harvest and the Ohio association of food banks.

"We must have our name taken off the Web page of the Ohio Coalition for Responsible Lending. (America's Second Harvest) got another call today from Rent-A-Center as they thought it would be gone by now since my conversation with them last Tuesday," Goodman wrote in an April 18 e-mail to the association's executive director.

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In a series of telephone calls in recent weeks, Rent-A-Center executives warned America's Second Harvest and its Ohio affiliates that Rent-A-Center would yank charitable contributions from hunger programs in the state unless the local food banks withdrew from the Ohio Coalition for Responsible Lending. The coalition has been pressing the state legislature to cap high interest rates charged on payday loans.

Wednesday, the Ohio House passed a bill that would cap the annualized interest rate on payday loans at 28% and limit borrowers to four loans of $500 each a year. Ohio's governor said last week that he supports a cap.

Rent-A-Center currently charges interest rates on one-week payday loans that are equivalent to an annual rate of as much as 782%, according to a company Web site. In Ohio, the average borrower pays $15 for each $100 borrowed, and the typical loan is repaid in 19 days, a 288.16% annual rate, the company says.

"We must have our name taken off the Web page of the Ohio Coalition for Responsible Lending," Anne Goodman, chairman of the Ohio Association of Second Harvest Foodbanks, wrote in an email to a subordinate April 18. America's Second Harvest, the Ohio association's parent, "got another call today from Rent-A-Center, as they thought it would be gone by now."

Gus Whitcomb, a vice president at Rent-A-Center, based in Plano, Texas, confirmed that he and a colleague called food-bank officials repeatedly to say the company did not want its $500,000 pledge used to promote antipayday legislation. "No business is going to support an organization whose primary purpose is to hurt its customers or put its employees in the unemployment line," Mr. Whitcomb said in an interview.

Ms. Goodman said in an interview that endorsing the anti-payday-lending coalition was an error and a violation of the food banks' own rules. "Nobody has put any pressure on us," she said. The Ohio Association of Foodbanks "would never support anything that isn't directly hunger related."

Rent-A-Center's tactics come amid recent battles over payday lending from Oregon to Virginia. The move toward tighter regulation is part of a broader attempt by local, state and federal authorities to rein in expensive lending aimed at lower-income consumers, such as subprime mortgages and certain credit cards.

Bill Faith, legislative chairman of the Ohio Coalition for Responsible Lending, said it is "out of bounds" for a corporate donor to try to use its financial clout to change the public-policy position of a nonprofit organization. "They're just trying to buy people off," Mr. Faith said.

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A bill that consumer advocates say would become a national model for payday-lending regulation passed a divided Ohio House yesterday, despite industry warnings that it would drive their 1,600 stores out of business.

The measure wasn't approved without some political games by House Republicans, who put a major scare into bill supporters when they added -- and later removed -- an amendment banning the Ohio Lottery from adding Keno to its betting options, as proposed by Gov. Ted Strickland.

After months of debate over bills that were backed by either the payday industry or consumer advocates, the proposal that passed the House 69-26 is a victory for the Ohio Coalition for Responsible Lending, which pushed to lower the current 391 percent annual interest rate on two-week payday loans.

The group got a bill even more restrictive than it requested. It sought a maximum 36 percent interest rate and got 28 percent. The coalition wanted to limit borrowers to six loans per year, but the bill imposes a four-loan limit.

"It sends a really strong bipartisan message that we want to first be about protecting consumers in Ohio," said Bill Faith, a leader of the coalition.

Meanwhile, the payday industry, which was talking optimistically a few weeks ago that lawmakers were not supportive of an interest rate cap, got steamrolled.

"What have you accomplished here? You've eliminated a product that people need, and you've eliminated jobs," Daryl K. Dever, chief lobbyist for the payday industry in Ohio, told the House Financial Institutions Committee before it OK'd the measure yesterday morning.

Dever stressed that the bill, which moves to the Senate, would quickly close Ohio's payday stores and put 6,000 people out of work, because no one could make money under the proposed cap.

Jim Tucker of Worthington, who owns six First National Cash Advance stores, urged lawmakers to pass a more moderate alternative that lets him stay in business.

"We don't have to take a sledgehammer approach the very first time," he said.

Support increased for an interest-rate cap as more lawmakers, including Speaker Jon Husted and Financial Institutions Committee Chairman Christopher R. Widener, became convinced that the two-week loan model trapped borrowers in a debt spiral.

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After months of debate, members of the Ohio House of Representatives passed tough, new regulation of the payday lending industry Wednesday.

For the first time in Ohio, fees on payday loans would be capped at 28 percent.

Rep. Chris Widener, R-Springfield, chairman of the Financial Institution Committee, said it was time for the state to step forward and pass new regulations.

Speaking to members of the Ohio House, Widener said the bill would add new protections for consumers.

"As legislators sometimes we have got to step up and do something. And this is the time when we have got to do something. We need to eliminate the current check cashing law in Ohio," Widener.

Widener said the current law is not working for families and individuals.

He pointed out that some people are taking out payday loans nearly every week or every other week.

"Today is the day we have to step up and make a change," Widener said.

The bill won bi-partisan support, including the endorsement of a top Democrat who had pushed for many months for less comprehensive legislation.

Rep. Robert Hagan, D- Youngstown, acknowledged the new regulations would push some payday lenders out of the state.

"We're not trying to hurt someone, we're trying to make this a better state," said Hagan.

Advocates for the payday lenders in Ohio said about 6,000 people work in the industry statewide and predicted the new regulations would put many of them out of work.

In an interview with WHIOTV.COM, Widener said members of both sides of the aisle appreciated efforts to protect consumers.

"We need to eliminate check cash lending as is currently laid out in Ohio and provide for some new products under the umbrella of the protection of the Small Loan Act which already caps fees and interest at 28 percent," Widener said.

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After months of controversy over three bills in the Ohio House aimed at regulating payday lenders, legislators joined to pass a fourth one in about 24 hours.

House Speaker Jon Husted, R-Kettering, on Wednesday said House Bill 545 has been OK'd and was on its way to the state Senate for consideration. The bill, introduced by Rep. Chris Widener, R-Springfield, on Tuesday, would cap annual percentage rates on payday loans at 28 percent, extend the repayment period to 31 days from 14 days and cut the maximum loan amount to $500 from $800.

Representatives of the state's 1,638 payday lending shops have said the House measures would kill the industry, particularly with the APR caps. Payday lenders can charge up to $15 per $100 loaned over a 14-day period, which converts to an annualized 391 percent. Instituting a rate ceiling at a fraction of the current maximum, as H.B. 545 and two other bills have proposed, would cap fees at a few dollars per $100.

Lisa Ferguson, spokeswoman for CheckSmart Financial Co., which has 90 payday lending shops in the state, called the measure a clear message from legislators "who want to put over 7,000 out of work with the passage of this bill."

"It does nothing but drive an already regulated business out of business," she said. "This choice for thousands of Ohioans will be gone and it will push consumers to unregulated means of borrowing."

Karen Stivers, a spokeswoman for Husted, said the bill is viewed by lawmakers less as a blow to the industry but more as a boon for consumers, who also would be prohibited from taking out new loans to pay off old debt.

"We've taken steps to help Ohio consumers escape the cycle of debt prevalent not only in Ohio but across the nation," she said. "This is a way out of that vicious cycle for consumers."

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The Ohio House on Wednesday approved a bill that caps interest rates on payday loans at 28 percent, the Cleveland Plain Dealer reported.

The vote was 68 to 26 in favor of the measure, which took the place of a previous bill that set the cap at 36 percent. It now moves to the Senate, where there had been strong support for the 36 percent cap, the Plain Dealer said.

A cap of 28 percent would likely cause payday lenders to leave the state, experts say. Under current law, they can charge up to 391 percent in interest.

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In a surprise move Tuesday, House Republicans introduced legislation that would cap the annual percentage rate charged on payday loans at 28 percent.

The bill, which is expected to clear a House committee today and possibly hit the floor for a vote, was a sudden reversal in policy on the rate cap and appeared to be an effort to trump Gov. Ted Strickland.

On Friday, Strickland issued a letter to the Coalition for Responsible Lending stating it was critical that any payday lending bill would have an all-inclusive 36 percent rate cap.

State Rep. Chris Widener, R-Springfield, introduced legislation Tuesday that includes the 28 percent annual rate cap, bans any other fees and stops someone from having more than two loans at one time.

The bill also limits the total loan amount to $500, gives borrowers a minimum of 31 days to repay, mandates financial counseling for anyone seeking

a third loan and prohibits anyone from having more than four loans in one year.

Currently, single loans are limited to $800 and are repaid in two weeks. No one is supposed to have more than one loan at a time, but there is no method to police the industry. The Beacon Journal has interviewed individuals with 10 or more loans out at a time.

Widener's bill would create a statewide database maintained by the Ohio Department of Commerce to track loans.

The bill also would provide increased consumer protection by placing the payday industry under the Consumer Sales Practices Act and the Small Loan Act in Ohio, Widener said.

High interest rates

The industry has come under fire in Ohio and other states for charging 391 percent interest rates and trapping borrowers in cycles of debt.

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The Republican-led Ohio House plans Wednesday to approve one of the nation's toughest caps on the storefront payday lending industry in the nation. The plan would limit interest rates on such loans at a stunning 28 percent.

Until Tuesday, when the more restrictive interest rate was announced, the best hope of industry opponents after months of lobbying was a rate cap of 36 percent on the short-term credit payday lenders provide. That figure would have matched the toughest restrictions enacted in other states.

Before the sudden turnaround, a pending House bill had left current interest rates that reach 391 percent untouched.

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In a stunning turn, Ohio House Republicans will offer a stringent payday lending bill today capping loan interest rates at 28 percent annually, below the 36 percent cap that supporters of new industry restrictions had sought.

"Payday lending as we know it ends with this bill," said Bill Faith, an advocate for the poor and a leader in the Ohio Coalition for Responsible Lending, the group behind bipartisan legislation featuring a 36 percent cap that had stalled for months in a committee in the GOP-controlled House. "And that's cause for celebration because that means hundreds of millions in fees that Ohioans won't be paying."

Darryl Dever, chief lobbyist for Ohio payday lenders, said the bill will shutter payday lending outlets across the state, costing about 6,000 jobs. He said he also expects two national payday lenders with headquarters in Ohio to leave the state.

"If 36 percent puts you out of business, what do you think 28 percent is going to do?" asked Dever.

As late as Monday, House Financial Institutions Committee Chairman Rep. Chris Widener, a Springfield Republican, was still pushing a payday lender-friendly plan that emerged last week from House Republicans. It would have charged consumers a loan origination fee of $15 for every $100 lent by a payday lender, essentially keeping in place the 391 annual percentage rate lenders currently can charge.

So what changed? Widener wasn't talking to reporters Tuesday about the newest version, but Gov. Ted Strickland entered the fray late Friday, clearly staking out his position in support of a 36 percent rate cap.

"I want to kiss the governor," said Rep. Bill Batchelder of Medina, the lead Republican sponsor of the bill with the 36 percent cap. He said he thought the Democratic governor's support helped solidify lawmaker votes for a hard rate cap.

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Backers say the legislation will end a debt trap that has snared thousands of Ohioans who thought they needed a quick financial fix but ended up borrowing more and more.

Darryl Dever, spokesman for payday lenders, said, however, that legislation the House is expected to vote on today, April 30, will wipe out 6,000 jobs and destroy a product that many consumers want, need and know how to use.

House Bill 545 would set a 28 percent annual rate cap on so-called payday loans and impose restrictions, such as limiting a borrower to four loans a year.

Currently, fees are usually $15 for every $100 borrowed for two weeks, which calculates to an annual percentage rate of 391 percent. Payday lenders won't make enough to stay in business under the new cap, Dever has said.

Speaker Jon Husted, R-Kettering, said the bill would "end the cycle of entrapment that consumers who've been using payday loans find themselves in."

He and Rep. Chris Widener, R-Springfield, the sponsor, were to brief the Republican caucus on the bill Tuesday night. Some opposition was expected.

Tom Allio, chairman of the Ohio Coalition for Responsible Lending, applauded the bill as "absolutely unbelievable."

"I've never seen politics change so quickly in a positive way," he said.

Widener last week outlined legislation with no rate cap but with other provisions that he said would end the debt trap. He said he added the cap after others didn't grasp his first approach.

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Payday lending is alive and doing fairly well in Ohio, but proponents of the short-term loan practice say things could go south quickly if the state legislature adopts a bill that would drastically reduce the amount lenders can charge for the service.

House Bill 333, and a mirror bill recently developed in the Senate, would lower the annual percentage rate (APR) that payday lenders can charge to 36 percent. Gov. Ted Strickland recently announced he favors the cap, as do mayors from several of the state's largest cities.

Supporters of HB 333 say the lenders are currently able to charge an APR that works out to 391 percent.

"We don't want to be unreasonable, and I'm not saying we wouldn't consider a compromise, but 391 percent APR is too high," said Bill Faith, legislative chairman for the Ohio Coalition for Responsible Lending, a Columbus-based, 241-member group of advocates for fair small loan lending practices.

"I think most people look at payday lending like I did-yes, people may be getting overcharged, but it's not happening that much," Faith said. "But in reality, people are getting caught in this lending cycle payday after payday. We just want them to have options."

Darryl Dever, a Columbus businessman and lobbyist for Ohio's payday lenders, who now operate 1,638 storefronts across the state, said the coalition is "crying wolf to force us out of business."

He said the notion that payday lenders are charging 391 percent APR is deceptive because the money is not being loaned on an annual basis.

"That figure just feeds a lot of emotionalism. These loans are not for an entire year; they're two-week loans at 15 percent interest per $100 borrowed," Dever explained.

"If that rate is cut to 36 percent APR, the lender would only be able to charge about $1.38 for a $100 loan," he said. "That would put all of these lenders out of business."

Payday lenders provide a viable service to Ohioans who need small, short-term loans to cover emergencies or pay bills that come due before payday, Dever said. He said he has received more than 26,000 letters from people who want the service to continue.

"There is no crisis, and more than 90 percent of borrowers are paying their loans on time," he said.

Paul Wallace, supervisor at locally owned Insta-Cash Payday Loan and Check Cashing, 1009 Washington Blvd. in Belpre, agrees. The firm has been in business since 1999.

"I guarantee that any retail or grocery store in this area deals with far more bounced checks than we do," he said. "We write off less than 1 percent of the checks we receive."

Wallace said his average customer makes around $31,000 a year and often just needs a small loan to pay a bill or meet some other need prior to payday.

"We can tell if someone may have a problem paying off a loan," Wallace said. "That's one reason we require people to bring in their phone bills. We can look at information like that and tell who might be a risk.

"We probably turn down about 10 percent," he said. "If you don't meet the criteria, you can't get the money."

Wallace said something often overlooked by critics of payday lending is that the interest rate on the short-term loans hasn't changed much since Ohio approved the process in 1995.

Attorneys Robin Bozian and Dennis Harrington with Southeastern Ohio Legal Services in Marietta estimate they handle 15 to 20 cases a year from people who get trapped in the lending cycle.

"Our halls aren't flooded with cases-but most of the people we see (for these cases) are in a lot of trouble," Bozian said. "The majority of payday borrowers want to pay back their loans, but they really can't afford it."

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The latest version of payday lending legislation that House Republicans unveiled Tuesday would cap the short-term loans at 28% and permit consumers to borrow only four times a year.

The proposal (HB 545 ), introduced by Rep. Chris Widener (R-Springfield), chairman of the House Financial Institutions, Real Estate & Securities Committee, represents a dramatic change from an earlier draft version from last week that sought to exchange the current 391% annual percentage rate for a $7.50 flat fee per $50 borrowed.

The new bill would also: prohibit loan origination fees; bar loan terms of less than 31 days; offer borrowers extended payment plans; and limit loan amounts to $500 or 25% of the consumers base monthly pay. (Bill Summary)

The measure is set for a hearing and possible committee vote on Wednesday. Speaker Jon Husted (R-Kettering) planned to try and sell the plan to his caucus, which has been splintered on the issue, during a closed meeting Tuesday evening.

Consumer advocates, meanwhile, hailed the new proposal as a strong response that would halt the "cycle of debt" that makes low-income borrowers seek additional short-term, high-cost loans to pay off previous ones.

Ohio Coalition for Responsible Lending spokesman Bill Faith called the bill "fabulous."

"It actually fixes several problems that we saw with payday lending that we didn't quite address in the other bills that we worked on," he said, pointing to new restrictions on Internet lending and loan amounts.

"And the rate cap of 28% looks to be very solid. The language is all-inclusive, there's no loopholes," he said. "It's great. I can't think of a significant problem with payday lending that this bill doesn't fix."

The coalition's jubilant reaction was matched by the payday lending industry's despondency.

Darryl Dever, who represents the Ohio Financial Services Centers Association, said the bill would surely snuff out the industry - and 6,000 jobs - in Ohio. "We're not happy with most of what's in that bill. If you can take a bad situation and make it worse - mission accomplished."

Many House members believe that problems associated with payday lending do require some revisions to current law, he allowed. "But they also understand that 36% APR, as proposed by Batchelder and others, would put us out of business. It goes without saying that 28% just gets you there a little quicker."

One provision he said was positive would permit loans no higher than 25% of the consumer's base monthly income. "That would be the first time in the state of Ohio you'd really be saying, 'we know you need to borrow money, but we'll never let you borrow more than you make.'"

Nonetheless, if the current proposal becomes law, he said, "Those things won't matter - we're not going to be in business to have to deal with it all."

Various members of the House Republican Caucus revealed a lingering hesitancy to impose a rate cap on the short-term, high-cost loans for fear that it would leave low-income consumers with no viable credit options.

Speaker Husted in preparation for what was expected to be an intense caucus debate over the issues, was armed with documents highlighting the depth of Americans' debt problems when he discussed the plan with reporters following session.

The speaker said he was "trying not to dictate the outcome" of how his members should address payday lending. "But I'm trying to provide the information that will hopefully lead them to the conclusion that we need to step up and end the cycle of borrowing."

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The city of Parma became the second Northeast Ohio community to slap limits on the numbers and locations of payday lending stores.

The law allows one store for each 10,000 residents. There are seven stores now in the city. With an 80,000-plus population, one more lender could open.

Parma Mayor Dean DePiero pushed for the restrictions.

"We want to protect our residents," he said. "We think we have struck a balance."

Sharon Ponomarenko applauded the limits. She claims she was victimized by payday lenders.

"When they are so close together, you are tempted to go to each one," she said. "I been there, done that and that cost me a lot of money."

DePiero admits the lenders serve a legitimate need for some residents.

"But we don't want one on every street corner," he said.

The law also prohibits such stores from being within 1,000 feet of each other.

DePiero, a former state lawmaker, is calling on the legislature to pass a state measure capping payday lending interest rates.

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State lawmakers are seeking ways to change the way payday lenders do business in Ohio. One Mount Vernon resident who relies on the short-term loans said she opposes any kind of new regulations that would drive the ever-growing payday loan industry out of the state.

Ruby Marcum said she goes to Urgent Cash, a local payday lender, just about every month and borrows about $350. Around the third or fourth of the following month, she pays back about $400, which includes payment for the fees.

"I try to measure out what I will need for the next month," Marcum said. "It sure gets me through the rest of the month. I run out of money before the last week of the month."

Marcum, a senior citizen on a fixed income, said she always pays the loan back and has never had any problems.

But many who use the service cannot or do not pay back the loans, which lands them in court. The interest rate is at the heart of the payday lending controversy in the statehouse, and proposed legislation that would cap that interest rate at 36 percent.

Payday lending advocates argue that such a cap would drive companies out of business, while critics characterize payday lenders as predatory and push for tighter regulations. The industry has grown considerably in the last 10 years in Ohio, and there are about 1,600 of them in the state. Knox County has 10 payday lenders, none of which existed 10 years ago.

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You don't think Ohio should let payday lenders gouge borrowers with 391 percent annual percentage rates? Try on this "compromise" for size: the same 391 percent APR?

That's how dumb some House Republicans, even some Democrats, think voters are about a problem even George W. Bush saw. The president in 2006 signed a bill, backed by congressional Republicans that capped APRs at 36 percent for members of the armed forces and their dependents.

Why? Because unregulated payday lending was crushing military families with debt.

So now, miracle of miracles, the U.S. Congress actually looks good compared to the Ohio General Assembly. Thank a Clark County Republican who is blocking real payday loan reform for the legislature's sorry showing. Here's why:

The best payday-lending reform pending in Columbus is sponsored by Medina Republican William Batchelder and Youngstown Democrat Robert Hagan. It would cap payday loan APRs at 36 percent in Ohio.

But Springfield Republican Rep. Christopher R. Widener, chair of the Financial Institutions, Real Estate and Securities Committee, must have a tighter grasp on the issue than even the president of the United States. Widener won't let the committee vote on the 36 percent cap.

That suggests he fears the committee would approve it. Lenders don't want that. (In what must be a complete coincidence, a payday-lender PAC has donated to Widener's state Senate campaign fund.)

At a closed-door House Republican caucus Wednesday night, a lender-friendly counter-plan surfaced. To call it a "compromise" does to the English language what a gutting knife does to a deer. The gist: Payday lenders said they'd stop charging Ohio borrowers any interest at all. But there's a catch: Those lenders would instead charge Ohioans a "loan origination fee" of $15 per $100 borrowed. Applying the loan fee to an Ohio payday loan would amount to an APR of . . . 391 percent.

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Gov. Ted Strickland demonstrated executive power exists in Ohio in his battle with House Republicans over electric re-regulation.

Now, less than a week after that controversy appears settled, in large part because Strickland threatened a veto, the two sides appear ready to square off over payday lending.

For months, the Ohio House has been sitting on three bills to regulate the payday-lending industry, which has been accused of trapping people in cycles of debt and charging excessive interest rates.

Strickland, who has been relatively quiet on the issue, stepped front and center Friday by sending a short and succinct letter to the Coalition for Responsible Lending that outlines his position on the bill.

''While there is much debate regarding the various ways to address the payday-lending problem in Ohio, I believe there is one critical feature of any set of proposals aimed at breaking the cycle of debt - an all-inclusive 36 percent APR cap,'' Strickland wrote.

His spokesman, Keith Dailey, said ''all-inclusive'' means a maximum APR, or annual percentage rate, of no more than 36 percent, including fees and other charges associated with the loan.

The 36 percent cap is at the core of legislation sponsored by state representatives William Batchelder, R-Medina, and Bob Hagan, D-Youngstown.

The payday-lending industry has launched a massive lobbying effort to kill the Batchelder-Hagan bill, arguing that a 36 percent cap would shut down the storefront outlets and people with no means to work through a short-term financial crisis would have no place to turn.

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Speaker Jon Husted promised to move payday legislation through the Ohio House within two weeks. He indicated, too, that the measure would likely include a limit on the interest rates the lenders are permitted to charge.

A little over two weeks later, there has been more activity on payday legislation than the House Financial Institutions Committee and its chairman Chris Widener, had managed the past six months. Whether the activity is moving Ohio any closer to a better loan product, curbing the predatory aspects of the industry, is not so immediately clear.

The problem is that Ohio permits the quick-cash stores to charge interest rates on small, two-week loans that amount to a 391 percent annual rate. Several studies (as well as former industry operators who testified before the House committee) have described how the high-interest, quick turnaround business model sucks consumers into a cycle of debt, leading to repeated borrowing and paying over time much more in interest charges than the amount of the original loan they took out.

One reasonable solution is to reduce the exorbitant interest rates, close the avenues for consumer exploitation and increase alternative sources for borrowers to obtain small loans at less usurious rates.

House Bill 333 attempts to achieve those major objectives with proposals to cap the interest rate at 36 percent and limit the number of loans a borrower can take out in a year. The lenders contend that lower rates would practically shut down the industry and leave Ohio consumers hard up for affordable quick loans. (It makes one wonder how residents in Pennsylvania and other states without such payday lending make available quick, short-term loans.)

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Gov. Ted Strickland wants to put a 36 percent annual interest rate cap on loans made by payday lending stores.

State Rep. Chris Widener, R-Springfield, chairman of the House committee considering payday lending restrictions, said Friday, April 25, that he is taking a different approach.

Strickland announced his position in a Friday letter to the Ohio Coalition for Responsible Lending, a group backing payday lending restrictions.

Fees now are usually $15 for every $100 borrowed for two weeks, which calculates to an annual percentage rate of 391 percent.

"It is my hope that a bill with such a rate cap (36 percent) is moved through the legislative process, and I would have the opportunity to sign this policy change into law in the near future," Strickland said in the letter.

The letter said that the state must make sure that such loans "are structured in a way that does not exploit those who are in need."

Suzanne Gravette Acker, spokeswoman for the coalition, called Strickland's letter "wonderful news."

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Gov. Ted Strickland wants to put a 36 percent annual interest rate cap on loans made by payday lending stores.

However, state Rep. Chris Widener, R-Springfield, chairman of the House committee considering payday lending restrictions, said Friday, April 25, that he is taking a different approach.

Strickland announced his position in a Friday letter to the Ohio Coalition for Responsible Lending, a group backing payday lending restrictions.

Fees now are usually $15 for every $100 borrowed for two weeks, which calculates to an annual percentage rate of 391 percent.

"It is my hope that a bill with such a rate cap (36 percent) is moved through the legislative process, and I would have the opportunity to sign this policy change into law in the near future," Strickland said in the letter.

The letter said that the state must make sure that such loans "are structured in a way that does not exploit those who are in need."

Suzanne Gravette Acker, spokeswoman for the coalition, called Strickland's letter "wonderful news."

However, Widener, chairman of the Financial Institutions, Real Estate and Securities Committee, said that his committee's research found that in states with such caps there is no short term credit available to consumers.

He said he was developing a bill with two key provisions: limiting the amount a consumer could borrow at any one time to $500 total from up to two lenders and limiting to two the number of loans a consumer could take out in a 90-day period without participating in a consumer counseling class.

Gravette Acker said this approach would not address what she called the "debt trap" of payday loans.

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Gov. Ted Strickland said Friday that he strongly supports a 36 percent interest-rate cap on payday lenders. Meanwhile, House Republicans have drafted a compromise bill that does not lower the interest rate but, they argue, should break customers from the debt trap.

Although the developments aren't compatible, they both represent blows to the payday-loan industry in Ohio.

Payday-lending supporters now feel like they're being pummeled from all sides. As the governor backs an interest rate the industry says would quickly put Ohio's 1,600 stores out of business, House Republicans are crafting a bill that a payday lobbyist says could kill the lenders slowly.

Strickland called the annual interest-rate cap of 36 percent a "critical feature of any set of proposals aimed at breaking the cycle of debt."

"As I travel throughout the state and meet with Ohioans, I am struck by the significant problems that have resulted because of the unfortunate practices of some payday lenders in Ohio," Strickland wrote in a letter to the Ohio Coalition for Responsible Lending.

Three payday-lending bills have been debated in Widener's committee for months. He took some parts of those bills and added new wording that doesn't change the current annual interest rate of 391 percent ($15 per $100 borrowed on a two-week loan), but it lets customers extend any two-week loan by at least 60 days.

The bill also would limit borrowers to holding no more than two payday loans at once, does not allow borrowers to have more than $500 total in such loans, and requires a financial-literacy class for anyone who wants to take out three loans in 90 days.

The goal, Widener said, is to make the high-interest, two-week loans available for people who really need them for short-term emergencies, while breaking the debt cycle where borrowers repeatedly take out new loans to pay off old ones.

Bill Faith, a leader of the Coalition for Responsible Lending, said the revised bill doesn't go far enough to address the debt trap. He would like to see a 36 percent interest rate - the same federal cap placed on loans to military personnel. Both Republican and Democratic House caucuses are divided over a rate cap.

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Gov. Ted Strickland said yesterday that he strongly supports a 36 percent interest-rate cap on payday lenders. Meanwhile, House Republicans have drafted a compromise bill that does not lower the interest rate but, they say, should free customers from the payday debt trap.

Although the twin developments are incompatible, they both represent blows to the burgeoning payday-loan industry in Ohio.

Payday-lending supporters now feel like they're being pummeled from all sides. As the governor backs an interest rate that the industry says would quickly put Ohio's 1,600 stores out of business, House Republicans are crafting a bill that a payday lobbyist says could kill the lenders slowly.

Strickland called the annual interest-rate cap of 36 percent a "critical feature of any set of proposals aimed at breaking the cycle of debt."

"As I travel throughout the state and meet with Ohioans, I am struck by the significant problems that have resulted because of the unfortunate practices of some payday lenders in Ohio," Strickland wrote in a letter to the Ohio Coalition for Responsible Lending.

Meanwhile, Rep. Christopher R. Widener, chairman of the House Financial Institutions Committee, also issued a warning to payday lenders.

"I told the industry that their product is going to change drastically if they want to keep doing business in Ohio," said the Springfield Republican, who took the lead in writing a revamped bill unveiled this week.

Three payday-lending bills have been debated in Widener's committee for months. He took some parts of those bills and added new wording that doesn't change the current annual interest rate of 391 percent ($15 per $100 borrowed on a two-week loan), but lets customers extend any two-week loan by at least 60 days.

The bill would limit borrowers to holding no more than two payday loans at once, does not allow borrowers to have more than $500 total in such loans, and requires a financial-literacy class for anyone who wants to take out three loans in 90 days.

The goal, Widener said, is to make the high-interest, two-week loans available for people who really need them for short-term emergencies, while breaking the debt cycle in which borrowers repeatedly take out new loans to pay off old ones.

Bill Faith, a leader of the Coalition for Responsible Lending, said the revised bill doesn't go far enough to address the debt trap. He would like to see a 36 percent interest rate -- the same federal cap placed on loans to military personnel. Both Republican and Democratic House caucuses are divided over a rate cap.

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Springfield, Ohio - State Rep. Chris Widener will announce a plan on Monday, April 28, that will combine pieces of payday lending bills.

His plan calls for eliminating the current payday lending law and instead revising the existing Small Loan Act.

"The current (law), as it was laid out in 1995, is 13 years old and is not working," said the Springfield Republican who chairs the House Financial Institutions committee.

His suggestions include adding two loan products to the Small Loan Act.

One, taken from one of the three payday lending bills, would create a small loan linked deposit program.

That would allow lenders to work with the state treasurer to provide up to $800 loans with 90 day terms and an annual percentage rate capped at 36 percent.

The other product would be a 31-day loan with a $15 origination fee per $100, and no interest or other charges.

That borrower also would be able to request a 60-day extension at any time.

Another provision is to limit borrowers to $500 at a time, tracked with a statewide database.

That could stop the cyclical debt traps, Widener said.

Also, borrowers could not take out more than two loans in 90 days without taking a state-approved financial education course.

Widener also proposes to make the small-loan lenders subject to the Consumer Sales Practices Act, which regulates practices such as deceptive advertising and the ability to repay.

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After countless hours of hearings and a year of study, Rep. Chris Widener, R-Springfield, said Friday he and other lawmakers have struck upon a new plan for regulating payday lenders.

Payday lenders and check cashing operations advance people money in return for a check drawn on their next paycheck.

Consumer advocates pushed for years to end the practice, which they said catches consumers in an endless loop of debt and high fees.

Several bills were introduced by Democrats and Republicans alike to cap interest rates and add new regulations to protect consumers.

Check cashing companies and payday lenders, who have seen a dramatic increase in the number of outlets statewide, have resisted the changes.

In an interview with WHIOTV.COM, Widener said the legislative committee he chairs has come up with a new plan that takes a broader look at the problem.

"We are recommending eliminating check cash lending because the testimony has convinced us that we need to go in a different direction," Widener said.

A bill scheduled to be unveiled in detail next week would end payday lending as consumers know it today in Ohio.

Rather than add caps on interest rates charged by payday lenders, the bill takes a different approach.

The bill opens the door to more small, short term loans with a cap on fees at $15 per $100 borrowed.

Widener said licenses for short term loan operations would, for the first time, be opened to both for-profit companies and nonprofit organizations.

"The other key is to stop the cyclical nature of these loans. Some have used the word 'addictiveness.' Our proposal is that no one could get this kind of loan for more than three times in a 90 time period without taking a consumer finance education course," Widener said.

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XENIA - The City Council voted 7-0 Thursday, April 24, to join a handful of Ohio cities that are not waiting for the state to increase regulations on payday lenders.

Xenia's council moved to halt, for up to a year, the issuance of new zoning permits for cash advance and payday lending stores while city officials research how to strengthen regulations.

The 11 payday lenders and cash advance stores already in the city spurred the resolution, said Council member Dale Louderback, who campaigned on the issue last fall.

"When people drive through downtown, all they see are check-cashing places and bail bondsmen," he said. "To me they're nothing short of a loan shark. They prey on the disadvantaged."

City officials said a 2002 U.S. Supreme Court ruling allows for the moratorium.

Clayton City Council approved a similar measure March 30.

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Gov. Ted Strickland sided with consumer advocates who want to crack down on payday lenders by expressing his support Friday for a 36% annual interest rate cap on the short-term loans.

"While there is much debate regarding the various ways to address the payday lending problem in Ohio, I believe there is one critical feature of any set of proposals aimed at breaking the problem of the cycle of debt - an all inclusive 36% APR cap," he wrote in a letter to the Ohio Coalition for Responsible Lending.

Previously, Gov. Strickland said an interest rate cap would be "appropriate," but declined to say whether he supports legislation (HB 333 ) that would slash the current 391% APR down to 36%.

"It is my hope that a bill with such a rate cap is moved through the legislative process, and I would have the opportunity to sign this policy change into law in the near future," he wrote.

The governor's letter comes the day after Republican House members met with stakeholders to discuss a draft proposal that would essentially replace the current 15% interest on a $100 two-week loan with a $7.50 flat fee per $50 borrowed. (See Gongwer Ohio Report, April 24, 2008)

Speaker Jon Husted (R-Kettering) has said he wants members to take action on the issue, but hasn't specified whether he thinks the proposed 36% rate cap is the solution.

The payday lending industry vehemently opposes limits on the interest rate, arguing it would snuff out the only source of credit for many Ohioans that have no other options. Instead, they are promoting a bill (HB 337 ) that would offer borrowers extended payment plans.

Darryl Dever, who represents the Ohio Financial Services Association, said the governor's letter came as a surprise.

"I'm stunned," he said. "At a time we're trying to build the economy and retain jobs and build jobs in the state of Ohio, a call for a 36% APR is basically looking at eliminating 6,000 jobs."

Mr. Dever commended Republican House members for seeking other ways to address the issue, without capping interest rates. Nonetheless, the current measure under discussion remains problematic, he said.

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Two legislators discount Ohioans' intelli gence by acting confused about the per ils of payday loans to the voters they represent. Or it could be that Reps. Christopher R. Widener, a Springfield Republican, and Sandra Williams, Cleveland Democrat, just listen too closely to payday lenders' lobbyists.

Ohio lets payday lenders charge an annual percentage rate of 391 percent. The best reform plan on the Statehouse table would cap APRs at 36 percent; it's sponsored by Reps. William G. Batchelder, a Medina Republican, and Youngstown Democrat Robert F. Hagan.

Widener chairs the House Financial Institutions, Real Estate and Securities Committee. He's sitting on the 36 percent solution, and last week brazenly defended the 391 percent APR. "I have not heard anyone say that it's not fair," Widener told the Columbus Dispatch.

Widener must hear some people better than others. In January, his campaign accepted a $1,000 donation from a political action committee of Texas-based Cash America International, a pawnshop chain whose Cashland payday-loan storefronts pepper Ohio. Widener's campaign also accepted $2,000 from the Cash America PAC last summer; $1,000 in 2006; and $500 in 2005. Cash America reported 2007 revenue of $929 million, 34 percent better than it did in 2006. So much for the myth of payday loans' tiny profits. That's why the eyes of Texas are on Widener's Ohio House Financial Institutions committee.

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Parma becomes the second area community to limit the number of check cashing stores within city limits. The suburb modeled its ordinance after legislation passed in Cuyahoga Falls.

As approved by Parma City Council Monday night, the number of stores will be limited to one for every 10,000 residents, which amounts to no more than nine. The city currently has seven check cashing or payday lending stores.

The measure also limits new stores to locations zoned commercial or industrial, including Brookpark Road. It prohibits them along busy streets like Ridge Road, State Road, Broadview Road and Pleasant Valley Road. The businesses must also be at least 1,000 feet apart.

"We're not banning them from Parma. We're just trying to limit them," says Charles Germana, Parma's City Council President. Germana says he recognizes they fill a need, but at a high price. In Ohio, payday lenders can charge up to 391%.

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Payday lending typically gets discussed in good-guy/bad-guy terms.

The stores that make short-term loans at interest rates that come to more than 300 percent a year get painted as bad guys.

But the reformers who would deny consumers the opportunity to borrow on their next paycheck - when the alternative is having their electricity cut off - also get painted as bad guys.

And the politicians who take money from an industry and then protect that industry get painted as bad guys.

But let's strip all that way. Let's assume that there's a legitimate debate to be had here among people of good will.

Payday lending is a business that hardly existed as recently as 1990. But it has mushroomed. Under it, a person signs over part of his or her next paycheck to get fast cash. The cost might be $15 for a two-week loan of $100.

Some people say payday lending results in people being sucked into a cycle of debt, that signing away part of one check often requires them to sign away part of the next check, too, and so on. And the fees become part of their lives, sometimes adding thousands to their debt.

But there is also an argument that this spiral is the exception. More typically, some say, payday loans are used successfully and responsibly to help employed people through a short-term crunch.

Some defenders of payday lending are part of the industry. Others are borrowers who have used the service, or politicians who represent borrowers. Others are people, often conservatives, who just honestly believe that the government would do more harm than good by stepping in. Let the free market reign among law-abiding adults, they say.

Both sides throw around statistics and anecdotes. For the average citizen, cutting through all that is a daunting proposition.

But here's a fact that helps: The United States military found that so many troops were getting caught up in debt to payday lenders as to constitute a national security issue: thousands of insolvent soldiers could not be sent overseas because their financial circumstances might make them targets for blackmailers.

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Real people - not the paid-to-be-here, fiddling-with-their-Blackberrys-crowd - flocked to the Statehouse Thursday for a committee hearing on a payday lending bill that would cap interest rates for the short-term, high-interest loans at 36 percent.

And we do mean flocked: The large hearing room didn't have an empty seat, the hallway was lined and a dreary overflow room where you could only listen to a speaker even drew takers.

Judging by the dueling buttons being sported, the "I support payday advance" posse outnumbered the "391 percent is not freedom" crew. The latter is a reference to the 391 annual percentage rate that payday lenders can charge.

While Republican House Speaker Jon Husted has said there is growing support for a rate cap in his caucus and 17 Democrats have called for a vote on the legislation, it still may have trouble clearing the committee.

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Calling the dreaded 391 percent payday loan interest rate a "fictitious number," Rep. Christopher Widener said he is pursing a compromise bill that would boost industry regulations without cutting the rate charged to customers.

"I have not heard anyone say that it's not fair," the Springfield Republican and chairman of the House Financial Institutions Committee said of the current payday rate of about $15 per $100 borrowed on a two-week loan (391 percent annualized).

Widener's comments come a week after House Speaker Jon Husted, R-Kettering, said he sensed growing support for a stricter interest-rate cap among Republicans who control the House. That did not necessarily mean there was full or majority support, Husted said yesterday.

The rate cap has been the most contentious part of the debate over proposed regulations on the more than 1,600 payday lending stores in Ohio. Industry opponents most commonly cite support for a 36 percent cap -- the same limit the federal government imposed on loans to members of the military and the limit called for in House Bill 333.

A broad coalition, including advocates for the poor, say a rate cap is the best way to end the debt trap that snarls too many borrowers. A payday-lending official said yesterday that it doesn't matter whether the interest-rate percentage is capped at 25, 36, 153 or 260, because any one of them would put lenders out of business.

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Much of the debate on three payday lending bills revolved around numbers.

The short loans typically carry 391 annual percentage rate under federal calculations, 60 percent under the state formula or $15 for every $100.

Some testified at the Ohio House hearing on Thursday, April 17 that the finance charges are exorbitant.

"The fees that the payday lending industry is charging is outrageous," said Noel Williams, president of the Columbus NAACP branch.

Others said limiting interest rates would put them out of business, cause job losses and shut down a service for people in financial need.

"Customers are intelligent people who chose the lowest-cost alternative for themselves at that particular point in time," said Lynn DeVault, CEO of Check Into Cash and president of the industry's Community Financial Services Association.

Two of the bills seek to limit the APR, one at 36 percent and the other at 25 percent. The third, sponsored by state Rep. Ross McGregor, R-Springfield, aims to offer extended repayment plans and financial education.

State Rep. Chris Widener, R-Springfield, chairs the committee that discussed the bills.

The 36 percent cap could do away with the industry, Widener said, and he doesn't get the sense that that's what lawmakers want to do.

He is leaning toward combining pieces of all three bills into a new one. That could include regulations that limit the number of loans per customer at one time, create a statewide database to track loans, offer financial education and modify debt collection practices.

"Basically items we can do to stop the cyclical nature of people getting multiple loans from multiple lenders at one point in time and not being able to get out," Widener said.

Creola Johnson, an Ohio State University law professor, studied the industry with students who took out payday loans.

She suggested a database to track loans and prevent multiple ones at once, longer repayment plans from the beginning such as one month for each $100, and limiting loan amounts to a percentage of income.

"The law as it currently stands is insufficient," Johnson said.

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Ruby Thomas ran into trouble paying her mortgage when she switched jobs and went a while without a paycheck.

The Euclid resident turned to payday lenders to catch up.

"I was desperate but it was the worst thing I could possibly have done," Thomas told state lawmakers Thursday, April 17.

She joined several people who testified at an Ohio House hearing on three payday lending bills - two propose caps on interest rates and a third, sponsored by state Rep. Ross McGregor, R-Springfield, calls for extended payment plans and financial education.

Currently payday loans often carry a 391 annual percentage rate under federal calculations. One bill calls for limiting that to 36 percent and the other bill at 25 percent.

State Rep. Chris Widener, R-Springfield and chairman of the committee discussing the bills, said the way the APR is calculated under federal law is confusing and bears no relevance to the loans, which typically carry a $15 charge for every $100.

Thomas lost her house, she said, and has nine payday loans. She urged lawmakers to cap interest rates.

"You have the power to keep other families who are trying to live paycheck to paycheck from falling into payday debt," Thomas said. "Once you're in, it's a nightmare."

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They say there's no truer believer than a convert, so Ohioans are entitled to ex pect the General Assembly to enact no-gimmick payday lending reform. As Ohio law now stands, payday lenders may charge borrowers an annual interest rate of 391 percent. That's obscene.

The best plan pending, sponsored by Rep. William Batchelder, a Medina Republican, would cap payday loan APRs at 36 percent. A 36 percent APR would amply compensate payday lenders for repayment risks. The lenders are first to claim that offering credit to Ohio's poor is noble - and the last to admit it's handsomely profitable.

House Speaker Jon Husted, a suburban Dayton Republican, is taking commendably strong, if late, leadership on payday-lending reform. Likewise, House Democrats deserve some applause. They've now aligned with Batchelder. The People's Party had played Plunder Party, uncertain about a 36 percent APR, until The Plain Dealer revealed that House Democratic Leader Joyce Beatty's husband registered to lobby in Virginia for a payday lender. Then, like St. Paul en route to Damascus, the Democrats converted.

Reform momentum is also building in the Senate. On Monday, Sen. Timothy Grendell, a Chester Township Republican, introduced a Senate twin of Batchelder's bill. Among those allying themselves with Grendell and Ohio's poor are GOP Sens. Robert Spada of North Royalton and Ronald Amstutz of Wooster, and Democratic Sens. Dale Miller and Shirley Smith, both of Cleveland, Sue Morano of Lorain, Tom Sawyer of Akron and Senate Democratic leader Ray Miller of Columbus.

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Fourteen senators, including six Republicans, have signed on to support a bill introduced yesterday that would cap payday-lending interest rates at 36 percent, down from the current 391 percent annual rate.

The bill, sponsored by Sen. Timothy J. Grendell, R-Chesterland, is a copy of House Bill 333, which is one of three payday lending bills under debate in a House committee. House Speaker Jon Husted, R-Kettering, has said he wants a payday bill passed by the end of next week.

If Grendell's bill or House Bill 333 were to pass, the payday-lending industry says its more than 1,600 stores would be put out of business quickly. Under a 36-percent rate, they would be allowed to charge less than $1.50 per $100 borrowed on a two-week loan. The current rate is about $15.

The Senate is expected to let the House pass a bill before taking action on the issue.

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The seven-member city council voted unanimously Thursday to consider a 12-month moratorium on new payday-lending and check-cashing businesses.

Scheduled for a second reading and final vote at the April 24 council meeting, the measure would go into effect immediately, but would not affect any business already in operation within the city limits.

"We have 11 cash advances in Xenia and to me that's a poor public image," said Councilman Dale Louderback, a leading proponent of the measure.

Council President Patricia M. Felton said she believes that payday lenders should be regulated like banks, and that a bill currently under consideration in Columbus may help the situation.

"I know people need money on a short term loan sometimes, and I can see them charging a little more interest, but not that much," said Felton Thursday before the measure was introduced.

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Columbus- House Democrats on Thursday united behind a proposed 36 percent interest rate cap on payday loans and asked Republican Speaker Jon Husted for a vote on the measure.

"We believe quick action is prudent to effect real reform and deliver assistance to our constituents," said the letter to the speaker, signed by 17 House Democrats, including all four members of Democratic leadership.

Thursday's statement of unity from House Democrats follows a Tuesday Plain Dealer story that revealed that House Minority Leader Joyce Beatty's husband, Otto Beatty Jr., is registered as a lobbyist in Virginia for CheckSmart, an Ohio-based payday lender with 106 stores.

The revelation shocked Beatty's fellow House Democrats, who held several behind-the-scenes meetings this week, resulting in the decision to unite behind House Bill 333, a bipartisan piece of legislation that calls for a 36 percent rate cap. Beatty initially was against the bill but now says she supports it.

Asked about the letter following a news conference on his new energy plan, Husted said only, "Welcome to the bandwagon."

On Wednesday, Husted was more talkative about the issue, telling reporters there was growing support in his caucus for an interest rate cap on payday lending and that he wanted to vote on it within two weeks. However, he has declined to specify what that cap would be.

Rep. Bob Hagan, a Youngstown-area Democrat and one of the lead sponsors of House Bill 333, said the entire caucus supports the bill. He said Democrats are trying to force Republicans to give the measure an up or down vote. Republican members have broached the idea with Democrats of letting payday lenders charge flat fees -- say $15 for every $100 lent -- that would skirt an interest rate cap.

"The desire here is to make sure we stay true to the bill itself," said Hagan.

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COLUMBUS: In his third hearing to tighten regulations on payday lending, Ohio Attorney General Marc Dann was confronted by a church full of vocal and organized industry supporters.

Wearing bright yellow stickers that stated ''I Choose Payday Advance,'' industry supporters filled row after row of pews in the Good Shepherd Baptist Church on Columbus' northeast side.

Darryl Dever, the payday loan industry lobbyist in Ohio, was cheered as he addressed a panel of Democratic lawmakers, including state Rep. Kathleen Chandler, D-Kent, who joined Dann in the hearing.

At the same time, individuals who testified that payday lending storefronts use predatory marketing campaigns, charge usurious rates and snag borrowers in a debt trap were noisily shunned, forcing Dann to ask for decorum.

Dann has been holding hearings on payday lending, previously in Cleveland and Cincinnati, at the same time state legislators are considering three distinct proposals to further regulate the industry.

On Wednesday, he heard from a series of national voices that reducing the interest rate to 36 percent or 25 percent will close storefronts in Ohio and

leave people who need short-term loans with no place to turn.

Lynn DeVault of Cleveland, Tenn., who represents Checking Cash Inc. and the Community Financial Services Association, said her organization supports legislation that would provide lenders with an opportunity to extend the length of their loans with financial penalties.

DeVault said payday lenders fled Oregon after the state capped interest at 36 percent. She took issue with opponents who claim the Annual Percentage Rate charged by lenders in Ohio is 391 percent, noting the short-term loans are no more than 15 percent.

This argument prompted Chandler, without success, to ask DeVault and other payday supporters to pinpoint a percentage rate that would ensure profitability without being usurious.

Dann asked Dever and DeVault to voluntarily submit information on policies and procedures to avoid having his consumer protection section issue subpoenas for the information.

In contrast to DeVault, Chris Browning from Crestline near Mansfield told the panel she worked for 10 years in the industry and witnessed the transformation from helping people to succumbing to greed.

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Columbus - Ohio House Speaker Jon Husted said Wednesday that he wants lawmakers to act within two weeks on a payday lending bill, most likely one that caps interest rates that lenders charge.

"I think that prior to some of the discussions I've had over the past week, I probably would have said there wasn't any support for an interest-rate cap," Husted said after a House floor session. "But now, I think as people are starting to really get focused on it and learn more, they think there needs to be a definitive cap of some sort."

Legislative maneuvering intensified this week after a Plain Dealer story Tuesday revealed that House Minority Leader Joyce Beatty's husband, Otto Beatty Jr., had been registered since mid-January in Virginia as a lobbyist for CheckSmart, an Ohio-based payday loan company. The revelation shocked fellow Democrats who have been holding behind-the-scenes meetings in an attempt to come together on a payday lending proposal.

A trio of bills offering different levels of regulation have been in a House committee for months.

Husted, Republican of Kettering, wouldn't say whether GOP lawmakers would back a 36 percent cap - the proposed rate in the bipartisan-sponsored House Bill 333 - or what rate he supports. But his comments are the strongest signal yet that lawmakers in the GOP-controlled House are preparing to pass a bill containing some kind of interest-rate cap.

Beatty was an early opponent of House Bill 333, but this week said she would support a 36 percent cap. Supporters of the bill - including State Rep. Bob Hagan, Democrat of Youngstown, and Bill Faith, an advocate for the poor - have said Beatty has been a roadblock to getting the legislation passed.

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Speaker Jon Husted (R-Kettering) said Wednesday he intends to move legislation through the House within two weeks to update laws governing payday lenders, but didn't provide specifics on which bill would be the vehicle.

Several measures addressing the industry have been pending in committee for some time. They include a bipartisan plan that would significantly lower the interest rate the businesses currently charge for what are generally two-week loans (HB 333) and an industry-preferred measure allowing for extended payment plans for consumers (HB 337).

Several other measures that would impact the industry (HB 156, HB 358, SB 72 & SB 207) have been introduced, however none have advanced beyond the committee stage.

Asked by reporters about the status of the debate, Speaker Husted said after session Wednesday, "I've decided I'd like to try and get it done within two weeks - passed out of the House in two weeks."

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House Speaker Jon Husted said today he wants a payday lending bill passed within the next two weeks, and he senses growing support in his caucus for an interest rate cap.

A trio of bills proposing varying degrees of regulation of the short-term, high-interest loan industry have been pending in committee for months. Though the joint sponsors of House Bill 333, which proposes a 36-percent annual interest rate cap on payday loans, have said there is support for the cap, others around the Statehouse have disagreed.

"I think that prior to some of the discussions I've had over the past week, I probably would have said there isn't any support for a rate cap," Husted said. "But now, I think as people are starting to really get focused on it and learn more, they think there needs to be a definitive cap of some type."

Husted would not say if there are discussions include something other than a 36-percent cap, or if he personally is pushing for it. The payday industry has argued that a 36-percent cap would quickly put them out of business in Ohio.

Action on payday lending is heating up as House Democrats search for a unified position on the issue. Members were surprised this week to learn that House Minority Leader Joyce Beatty's husband, Otto, has been working as a lobbyist in Virginia for Dublin-based CheckSmart.

CheckSmart executive James Frauenberg II is president of the Ohio Association of Financial Service Centers, the organization that has been fighting legislation proposing a 36-percent rate cap on payday stores.

Senate Minority Leader Ray Miller, D-Columbus, who also has been pushing for tougher payday lending regulations, recalled that when the Ohio Legislative Black Caucus held a retreat late last summer, it was held at Otto Beatty Jr.'s law office.

He said Otto Beatty, who held the Columbus House seat prior to Joyce Beatty taking over, was not around for most of the caucus discussions. But when talk turned to payday lending, he came into the room to listen.

Miller said Otto Beatty did not participate in the discussion, though Miller said he was unaware until reading media reports this week that he was lobbying for CheckSmart.

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Ohio House Minority Leader Joyce Beatty may land a chapter in the Annals of Statehouse Hypocrisy. And that's not just her problem. It's also a bad problem for the House's other 45 Democrats. They want to pry the House from the GOP in November. That's a harder sell because, given Beatty's antics on payday lending, voters can fairly ask what difference a Democratic House would make.

Current law lets payday lenders charge Ohio borrowers, often poor people, an annual interest rate of 391 percent. And census data compiled by the Ohio Manufacturers Association show that Beatty's Columbus district ranks 97th (of 99) in median household income.

So payday lending reform should be a natural fit. But Beatty said Tuesday that, until she sees its final wording, she doesn't necessarily back the best plan now pending, sponsored by Medina Republican William G. Batchelder. His bill would cap payday loan APRs at 36 percent.

Last summer, Beatty told Democrats not to help Batchelder. Why? In the biggest reach since San Francisco bridged its bay, she said she feared Democrats might (indirectly) strengthen Batchelder in his quest to become the House's next GOP leader. But by then, term limits will have retired Beatty. And her strategy backfired: It let Batchelder, a free-marketeer whose calls Ronald Reagan returned, act as the little guy's big friend, while Democrats, the peoples' purported pals, looked away.

The Plain Dealer revealed Tuesday that Beatty's husband (and House predecessor), Columbus lawyer Otto Beatty Jr., is registered to lobby in Virginia for CheckSmart, a payday lender based in suburban Columbus with 106 outlets in Ohio.

Now that Columbus knows what Richmond knows, Mrs. Beatty emphasizes that she favors, as she claims she always has favored, payday-lending reform. She said her husband's CheckSmart work, which began after she initially opposed the bill, is, in effect, a coincidence. And Otto Beatty said he's not trying to influence anybody in Ohio. But even if people don't talk, money does.

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Charging a person up to 390 percent annual interest on a loan should be a crime. But it's legal in Ohio. Payday lenders haven't been reined in by our state legislators.

One reason is State Rep. Joyce Beatty. She's the leader of Ohio Democrats in the House, which is why people were perplexed last year when she opposed a cap on payday lending interest.

Democrats usually take on big business and side with the little guy. So when a bill came along to cap interest at 36 percent, it didn't make sense that Beatty urged leaders not to support it. She submarined her own party's efforts.

Why?

One excuse she offered was that Republican State Rep. Bill Batchelder had introduced the bill and she didn't want to help him rise to power. That's hard to buy even in this polarized political world.

Beatty is minority leader in more ways than one. She's black, and poor black people have been hit hard by payday lenders. Cuyahoga County has 163 payday loan centers. They offer short-term loans against your next paycheck but charge whopping interest. Their business model works best when they gouge people.

Haven't seen a payday lender? Drive through the inner city. They're everywhere. And in the inner city, most of the poor are black people.

Why wouldn't she fight for lower interest rates for them?

This week, Plain Dealer reporter Aaron Marshall broke the news that Beatty's husband is a lobbyist for CheckSmart, a payday lender with 106 outlets in Ohio. Otto Beatty Jr., a former state representative whose wife got his seat in 1999, registered in January as a lobbyist in Virginia for CheckSmart. The payday lender is based in Dublin, Ohio.

He's not a lobbyist in Ohio, but he could influence what goes on here by nature of his marriage. Was he in negotiations for that lobbying job last year? Was he doing any consulting then? Did Joyce Beatty have a financial interest or was she about to have one? Did her position on payday lending grease the wheels for hubby's lobbying spot?

I'm not saying it did. I'm saying that too many questions hang in the air.

Why does it matter what one's spouse does? Any financial gain he makes is hers, too. He won't say what kind of legal consulting work he's doing for CheckSmart or how much he's getting paid. He doesn't have to. He's a private attorney working for a private company. But his wife isn't. She's a public servant who owes us an explanation.

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Ohioans may find out soon whether payday lenders will have to cut their interest rates.

Legislative proposals have been languishing for months in an Ohio House committee, but Speaker Jon Husted said yesterday that he wants a bill ready to go in late April or early May. The Kettering Republican would not say whether he thinks that bill should include a 36 percent annual interest rate cap, the single most contentious issue of the debate.

"From my understanding, the committee is all across the board on this," Husted said. "What we do will be dramatically better, in terms of consumer protections, than the existing law."

A coalition pushing for strict regulation of the short-term, high-interest lending industry calls the rate cap vital to ending the debt trap that captures too many borrowers. The expanding industry, which says its services are vital to those with nowhere else to turn, says the cap would quickly put stores out of business.

The coalition is suddenly getting support from an unlikely source. Rep. Matt Lundy, D-Elyria, has been a joint sponsor of House Bill 337, which doesn't include a rate cap and is backed by the industry. But after hearing the debate, he now supports a 36 percent cap, he said.

The current annual rate is 391 percent (about $15 per $100 borrowed on a two-week loan).

If his bill comes up for a vote, Lundy said, he will offer a 36 percent rate cap in an amendment. "I think Ohioans deserve to know where we stand on the critical question of whether to limit the interest that payday lenders can charge," he said.

Told yesterday of Lundy's new stance on a rate cap, co-sponsor Rep. Ross McGregor, R-Springfield, said he was not aware of it and was not pleased. "That's shocking treatment of a colleague and joint sponsor," he said.

Meanwhile, the two legislators sponsoring House Bill 333, which includes a 36 percent cap, were concerned about yesterday's Cleveland Plain Dealer report that former Rep. Otto Beatty Jr., the husband of House Minority Leader Joyce Beatty, has been working since January as a lobbyist in Virginia for Checksmart, a payday lender based in Dublin.

Mrs. Beatty surprised some colleagues in 2007 when she came out in defense of payday lenders. Yesterday, she stressed that if House Democrats unite behind a 36 percent cap, "I'm going to be right there supporting my caucus."

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The husband of Ohio House Minority Leader Joyce Beatty is a registered lobbyist for CheckSmart, an Ohio-based payday lender with 106 outlets in the Buckeye State.

Otto Beatty Jr., a former state representative whose wife was appointed to his seat in 1999, registered in mid-January as a lobbyist in Virginia with CheckSmart, based in Dublin.

Ohio lawmakers are considering a number of bills that would regulate Ohio's payday-lending industry.

"There is no impropriety here, nor am I trying to influence anyone about payday lending," said Otto Beatty, who described his work on behalf of CheckSmart as legal consulting. "I don't do that in Ohio."

In 2007, Rep. Joyce Beatty, a Columbus Democrat, urged members of the Democratic caucus she leads to not support a payday-lending bill sponsored by state Rep. Bill Batchelder, R-Medina, that would cap the rates charged by payday lenders at 36 percent.

At the time, Beatty said she thought Batchelder was using the issue to further his bid to become House speaker.

Beatty said yesterday that she now supports the Batchelder proposal.

"I'm not supportive of the payday-lending industry," she said.

However, state Rep. Bob Hagan, a Youngstown Democrat, said he approached Beatty on the House floor last Tuesday seeking her help in lining up Democratic votes to get the bill out of committee.

"She said, 'Well, it's not going anywhere,' " he said. "And then she said, 'I talked to (House Speaker Jon Husted), and he said it's not going anywhere.' "

Continued Hagan: "So I'm running into a roadblock -- and it's not a very comfortable roadblock because I have been around too long to not realize something else is behind it. It's disappointing that this is what has been happening. I don't know whether this legal work is influencing her or not, but I do find it disappointing."

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Columbus - The husband of Ohio House Minority Leader Joyce Beatty is a registered lobbyist for CheckSmart, an Ohio-based payday lender with 106 outlets in the Buckeye State.

Otto Beatty Jr., a former, longtime state representative whose wife was appointed to his seat in 1999, registered in mid-January as a lobbyist in Virginia with CheckSmart, based in Dublin, near Columbus.

The news about Otto Beatty, who declined to say how much he was paid by CheckSmart, comes as Ohio lawmakers consider a number of bills that would regulate Ohio's fast-growing payday lending industry.

"There is no impropriety here, nor am I trying to influence anyone about payday lending," said Otto Beatty, who described his work on behalf of CheckSmart as legal consulting. "I don't do that in Ohio."

In 2007, State Rep. Beatty surprised political observers by urging members of the Democratic caucus she leads to not support a payday lending bill sponsored by Medina's Republican State Rep. Bill Batchelder that would cap the rates charged by payday lenders at 36 percent.

At the time, Beatty said she felt Batchelder was using the issue to help his campaign to become the next Ohio House speaker and wouldn't support anything being used solely for political gain.

But in an interview Monday, Beatty, of Columbus, said she has "come full circle" and now supports the Batchelder proposal.

However, State Rep. Bob Hagan, a Youngstown Democrat who bucked Beatty's wishes to become the lead Democratic co-sponsor on the Batchelder bill, described his leader as a "roadblock" on payday lending.

Hagan said he approached Beatty on the House floor last Tuesday seeking her help in lining up Democratic votes to get the bill out of committee.

"She said, 'Well, it's not going anywhere,' " he said. "And then she said, 'I talked to the [Ohio House] Speaker [Jon Husted], and he said it's not going anywhere.'"

Continued Hagan: "So I'm running into a roadblock - and it's not a very comfortable roadblock because I have been around too long to not realize something else is behind it."

Beatty said she knew her husband started doing work for CheckSmart in January, but she said that the couple keep their businesses separate and that he has never influenced her on the issue.

"His involvement would have started in 2008," she said. "In 2007, when all of this [controversy] was going on, I can say for certain he was not involved."

Beatty, whose political director in the House last year was hired away to work for the payday lending industry's chief lobbyist in Ohio, said she asked her husband to get information for her about the industry in other states after he was hired.

"Maybe I was being naive thinking that he could help me get information that I couldn't get otherwise, and we could have a win-win," she said. "Maybe I overestimated that I could save the world, but I thought he was someone who I can trust to tell me how bad this industry is."

Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio, one of the groups pushing lawmakers to act on payday lending legislation, called it unbelievable that Beatty's spouse works for a payday lender.

"I think it's rather shocking, but I don't know that it actually constitutes some violation of ethics rules or not," Faith said.

He said Beatty's early opposition to the legislation made passing a bill more difficult.

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Republicans on a certain Statehouse committee need a vocabulary lesson: They don't understand "poor," "gouge" or "lend."

The House Financial Institutions, Real Estate and Securities Committee is sitting on vital reforms of Ohio's outrageous payday-lending industry, which may now legally charge annual percentage rates of 391 percent.

House Bill 333, sponsored by Medina Republican William Batchelder would cap payday-loan APRs at 36 percent. But lenders' lobbyists are earning their pay checkmating Batchelder. A couple of other factors are just as negative.

One is the committee chair, Rep. Christopher Widener, a Springfield Republican who is running for the state Senate. The voters of Clark, Greene and Madison counties, and his Democratic foe for the Senate, Clark County Commissioner Roger Tackett, should be asking Widener how he can possibly defend 391 percent APRs. As the Springfield News-Sun wrote while tepidly endorsing Widener in the GOP primary, "Widener hasn't always made the best use of his [House] seat." No kidding.

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A modern day version of the story of David and Goliath is quickly unfolding at Ohio's Statehouse. The ''Davids'' of this story are the faith-based groups around the state, housing advocates, community-action, consumer and other anti-poverty organizations.

''Goliath'' is the powerful, payday lending industry that has grown to more than 1,600 stores and has gross revenues of $2 billion annually. The issue in question is whether Ohio's 12-year-old law on payday lending should be changed to provide basic protections for some 500,000 borrowers. The current law is so weak that it could be best titled, ''Ohio's Loan Shark Protection Act.''

Ohio is ground zero in a battle for the industry's survival. The industry has a privileged position in the marketplace due to special-interest legislation passed in 1995.

During that time, the industry received an exemption from Ohio's usury laws that permits lenders to charge 391 percent annual interest on a typical $300, two-week loan. They use a postdated check as security and are not interested in a borrower's ability to repay.

When the loan comes due, borrowers are more often than not forced to seek another cash advance to pay off the first one. This starts them down the path of multiple loans, which places them into a debt trap. They end up owing their soul to the neighborhood payday lending store.

A report by the Ohio Coalition for Responsible Lending, ''Trapped by Design: Ohio Payday Lending by the Numbers,'' found that the average Ohio payday borrower takes out 12.6 loans per year. More than 300,000 borrowers find themselves ensnared in a debt trap that pushes them into a deep, dark hole of debt from which they cannot easily escape.

Three payday lending bills are currently pending in the Financial Institutions, Real Estate and Securities Committee of the Ohio House. Two bills, H.B. 333 and H.B. 358, represent real reform for Ohio consumers. House Bill 337 is an industry supported bill that would allow the lenders to conduct business as usual.

Early signs in the committee do not seem favorable for consumers. The vast majority of the committee seemed unimpressed when a ''whistle blower'' who had worked four years in the industry testified on Jan. 22.

Terrence Jent told the committee how the business model involves preying upon the financially uneducated customer and those in significant financial trouble.

According to Jent, ''Nearly one-half of the payday-loan customers at both of the companies I've worked for were individuals that were drawing some form of Social Security or other retirement benefit.'' He described harassing collection procedures and how employees were instructed to encourage customers to go to another payday store if they were unable to pay their loan.

Jent also stated that the lender has the ability to electronically debit the borrower's bank account to collect