toledoblade.com --

COLUMBUS — It can sometimes be hard to tell from the TV ads, but Issue 5 on Tuesday’s ballot is all about payday lending.

The vote will end a showdown between lawmakers who have adopted a law restricting what they’ve characterized as a system that traps people in a downward cycle of repeat borrowing and an industry that presents itself as the only place where the Average Joe with short-term cash flow problems can turn.

“Three hundred ninety-one percent [interest] is outrageous,” said Sandy Theis, spokesman for the law’s backers. “A 28 percent rate cap is fair and reasonable. It will allow payday lenders to stay in business but allow hardworking people of Ohio to keep more of their money in their pockets.”

At issue is the typical two-week loan for those facing cash-flow problems between paychecks. The borrower pays a fee of about $15 per $100 borrowed, a rate that critics argue translates into a 391 percent interest rate over a full year.

The Republican-controlled General Assembly passed — and Democratic Gov. Ted Strickland signed — a bill capping the annual interest rate to 28 percent.

The law gives borrowers at least 30 days to repay the loan and caps the maximum amount of the loan at $500, down from $800.

The industry succeeded in filing enough signatures to put this portion of the law on hold while it took the dispute directly to voters. A “yes” vote means the voter approves of this section of the law. A “no” vote would repeal it.

“Ohioans should vote ‘no’ on Issue 5 to keep their short-term credit options, to keep their private financial decisions private, and to keep their private information out of a government database where their loans will be tracked and limited,’’ said Kim Norris, spokesman for the industry’s effort. “A vote ‘no’ means Ohioans won’t be forced into financial literacy training at their own expense after just two short-term loans,’’ she said.

The payday industry, Ohio Chamber of Commerce, and Ohio Grocers Association have maintained that the restrictions could ultimately put about 1,600 storefronts offering such loans out of business, taking with them about 6,000 direct jobs.

The industry also has focused in its ads on a separate provision of the law that would allow state government to track the number of loans borrowers take out.

“The state of Ohio has a horrible track record of keeping private financial information private with leaks of Ohioans information in the last year, including medical records [and] police and fire retiree information,” Ms. Norris said.

But Ms. Theis noted the portion of the law challenged by the industry’s referendum does not contain the database language.

“Nationally, payday lenders maintain a database and they have allowed that database to be breached,” she said. “They’ve settled with attorneys general across the country for letting people’s privacy be violated. For them to make this case is laughable because the database exists regardless of whether Issue 5 fails or passes.”

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