Bills Cap Predatory Lending at 36%
Average payday interest rate is 517%. Industry has given generously to legislators
Two GOP lawmakers have introduced two bills that would cap the triple-digit interest rates charged by predatory lenders in Wisconsin.
Assembly Bill 213 and Senate Bill 220 would cap at 36% the annual percentage rate that payday lenders can charge customers. Wisconsin is among a handful of states that does not cap payday lending rates. In 2020, the state reported the average annual payday loan interest rate was about 517 percent.
The bills were sponsored by Republican Rep. Scott Allen, of Waukesha, and GOP Sen. Andre Jacque, of DePere, but have attracted bipartisan support. Democratic lawmakers who cosponsored the bills include Sens. Tim Carpenter, of Milwaukee, and Jeff Smith, of Eau Claire, Assembly Minority Leader Gordon Hintz, of Oshkosh, and Reps. Mark Spreitzer, of Beloit, and Greta Neubauer, of Racine.
In Wisconsin, the issue has split along party lines over the past 20 years. Most Democratic lawmakers have favored tougher state rules, like capping payday lender interest rates. Most Republican lawmakers have favored looser restrictions.
Former Republican Gov. Scott Walker and GOP-controlled legislature approved looser restrictions on payday lenders in the 2011 state budget.
Between January 2015 and December 2020, current legislators and legislative fundraising committees received $222,950 in large individual, political action committee (PAC) and corporate contributions from the payday lending industry. Republican lawmakers, who control the Assembly and Senate, received $195,550, or 88 percent, of the industry’s contributions.
The top recipients were:
Republican Assembly Campaign Committee, $116,500
State Senate Democratic Committee, $15,600
GOP Sen. Dan Feyen, of Fond du Lac, $3,100
Individuals, PACs, and corporations from the payday lending industry who made more than $10,000 in contributions to current legislators and legislative fundraising committees between January 2015 and December 2020 were:
Advance America (corporation), Spartanburg, S.C., $57,500
Rod Aycox, Alpharetta, Ga., president of LoanMax, $40,500
Payday Loan Store (PLS) Financial Services (corporation), Chicago, Ill., $30,500
Wisconsin Financial Services Association (corporation), Madison, Wis., $26,500
Advance America Cash Advance Centers PAC, Spartanburg, S.C., $13,000
Trevor Ahlberg, Irving, Tex., chief executive officer of the Cash Store and Cottonwood Financial, $12,500
Select Management Resources (corporation), Alpharetta, Ga., $12,000.