Producer: Ohioans for Financial Freedom, a coalition mainly of payday lenders

Where to see it: Television and ohioans4financialfreedom.com

Script: (Narrator) "Washington regulators who brought us the mortgage mess are making a mess of Ohio's economy, and politicians are playing along. Washington regulators are forcing Ohio's short-term lenders to calculate emergency loans over a period of a year, even though the loans are just two weeks. Using Washington's rules, an average hotel room's annual rate would be astronomical, even though you stayed one night in the room. In the economic storm, keep all your loan choices. Vote no on Issue 5."

Video: Shot of a falling house of cards, graphic displays of rate charges, including $46,625 for an annual hotel room rate.

Analysis: As payday lenders' opponents hit the airwaves with ads pointing out the 391 percent annual interest rate of payday loans, the industry is striking back.

First, the ad's attempt to link the national mortgage crisis to the payday lending rate is absurd. The percentage-rate disclosure requirement was enacted under the Truth in Lending Act in 1968, more than three decades before the current mortgage crisis took shape.

Payday lenders in Ohio charge $15 in interest and fees for every $100 borrowed (the rate is a little less for loans above $500). A typical payday loan term is two weeks. So $15 per $100 over two weeks equals a 391 percent annual percentage rate.

Payday lenders argued throughout legislative hearings on House Bill 545, which lenders are trying to overturn with state Issue 5, that it is unfair to apply an annual interest rate to a two-week loan. They would rather call it a $15 fee or 15 percent. However, others argue that is too simplistic and misleading.

The Federal Reserve wants all lenders and credit-card companies to express their rates as an annual percentage rate to give borrowers an easy apples-to-apples comparison between various loan terms, rates and fees. For example, a two-week payday loan has a 391 percent annual percentage rate. If the loan term were for one month, the rate would be about 180 percent. If you could pay it back over three months, the rate would be about 60 percent. If a majority votes "yes" on Issue 5, the maximum rate for short-term loans would be 28 percent.

Payday lenders say that $15 is cheaper than other options, such as bounced-check fees. Opponents counter that their research shows the average payday borrower gets caught in a debt trap and takes out more than 12 loans a year, making the loans more than just short-term options.

The ad uses an analogy with a daily hotel room rate. But there is no confusion about hotel room costs. Unlike varying loan terms, each hotel advertises a daily rate, making comparisons simple.

-- Jim Siegel

jsiegel@dispatch.com