by Marc Kovac
Capital Bureau Chief
A standing-room-only crowd packed a state Senate hearing room and its mezzanine May 6 as lawmakers began their deliberations on legislation placing restrictions on the payday lending industry.
The Senate Finance and Financial Institutions Committee had its initial hearing on House Bill 545, which passed the other chamber a week earlier. The afternoon committee hearing followed a morning protest outside the Statehouse, where supporters of the payday lending industry voiced their opposition to the legislation and its potential effects on the state economy.
The legislation caps the interest rates charged on payday loans at 28 percent (compared to nearly 400 percent now) and prohibit lenders from adding additional fees, interest or costs. Individuals could borrow up to $500 or 25 percent of their monthly pay.
It would limit borrowers to four payday loans per year, prohibit them from taking out a new loan to pay off an old one and require consumer education courses for those who take out two loans within a three-month period.
The bill also would create a new statewide database to track loan information for all borrowers.
Opponents believe the bill will have a devastating effect on the payday loan industry, likely closing locations and costing 6,000-plus Ohioans their livelihood. They also question where people strapped for cash and facing emergencies would go for smaller, short-term loans.
Senate President Bill Harris, a Republican from Ashland, said he hoped the bill could make it through the committee process before the summer break in about a month.
He added that supporters, opponents and other interested parties would be given opportunities to testify before the bill is brought to the floor for a vote.
"And if there are new ideas, we will certainly listen to those," he said, adding, "If there's ideas that we come up with, whether it's on the cap or some other portion of it, then we will debate that openly in committee and discuss it."
Marc Kovac is the Dix Newspapers Capital Bureau chief. E-mail him at mkovac@dixcom.com.