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Bills Cap Predatory Lending at 36%

Average payday interest rate is 517%. Industry has given generously to legislators

By - Apr 20th, 2021 01:07 pm
Payday loans. Photo by Aliman Senai / CC BY-SA (https://creativecommons.org/licenses/by-sa/4.0).

Payday loans. Photo by Aliman Senai / (CC BY-SA).

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.

Advocates say tougher regulations are needed because payday and auto title loan providers and check-cashing outfits prey on poor consumers who cannot get traditional loans at lower interest rates.

The bills are opposed by out-of-state payday lenders with operations throughout Wisconsin and supported by Outagamie County and the City of Milwaukee.

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

Committee to Elect a Republican Senate, $69,750

State Senate Democratic Committee, $15,600

Assembly Democratic Campaign Committee, $10,500

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.

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