SPRINGFIELD, Ohio -- 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.

Under the plan, the state would create a database to track loans given to individuals to help prevent the current cycle of debt. Some consumer advocates said customers often have five to 10 payday loans going at once.

While the changes may help consumers, Widener is unsure what it will do to companies with payday lenders.

He said it may cause some locations to shut down, or push some lenders to leave the state altogether.

“Some entities will adapt to it and provide this product. Some entities, particularly when they see the stringent requirements we are putting in, some will adapt and some will leave Ohio,” Widener said.

The new regulations would include state-mandated background checks for lender employees and managers.

Widener said further details on the new regulations would be unveiled at the Ohio Statehouse early next week and discussed at a full hearing of the Financial Institutions, Real Estate and Securities committee on Thursday, May 1.

Ohio Gov. Ted Strickland said Friday he supports a mainstay of several earlier versions of proposed payday lending bills.

In a letter to the consumer group. Ohio Coalition for Responsible Lending, Strickland said whatever new law is passed does not allow people to be exploited.

"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 at breaking the cycle of debt- an all inclusive 36% APR rate cap," Strickland said.

He told the group he hoped a bill with a rate cap would be approved by the legislature soon.

Jim.otte@whiotv.com