Payday lenders under scrutiny in public hearing

It wasn't hard to tell payday lending employees from the rest of the crowd at Thursday's public hearing on payday loans: They were the ones wearing bright green stickers that said, "I choose payday advance."

About 230 people -- roughly a third of them sporting stickers -- showed up for the hearing at Antioch Baptist Church. Some were consumers like Roslyn Sudberry who came to tell their stories of becoming trapped in payday loans. Some were industry representatives, like lobbyist Darryl Dever, who testified to applause from the green-badge wearers. And there were plenty of consumer advocates who drew parallels between high-interest payday loans and the subprime mortgage meltdown.

Sudberry, of Bedford, said she took out an $800 loan that she was required to repay -- with an additional $112.50 -- two weeks later. The cost of the loan, she said, made it necessary for her to keep borrowing.

When asked if she was pressured to take out additional loans, Sudberry responded: "Once you pay the loan off, you have no money. . . . They know you're coming back, so there's no pressure."

Payday loans allow consumers to borrow against their next paycheck. The loans, exempt from usury laws, carry an annual interest rate of 391 percent.

Ohio Attorney General Marc Dann is believed to be the first state attorney general to use his authority to hold a public hearing. Dann had a court reporter on hand and insisted that anyone who testified be sworn in first.

Rep. William Batchelder, a Medina Republican who proposed capping payday loan interest rates at 36 percent, joined Dann on a panel with three colleagues from the House: Robert Hagan of Youngstown, Matt Lundy of Elyria and Lance Mason of Shaker Heights, all Democrats.

The legislators got a minilecture from Tom Allio, who heads the Ohio Coalition for Responsible Lending.