30 May 2009
The chairman of the State Assembly committee on consumer protection has introduced the Payday Lending Consumer Protection Act,which supporters said will provide Wisconsin consumers protections against predatory lending by limiting interest rates for consumer loans to 36 percent annually.
Currently in Wisconsin, the average rate on a two-week payday loans amounts to an annual percentage rate of 525 percent and in 2005 it was estimated that Wisconsin consumers paid $124 million in predatory fees, according to a press release Thursday from state Rep. Gordon Hintz (D-Oshkosh), who is chairman of the committee.
Hintz’s office said that there has been significant growth in the number of payday lending operations in Wisconsin. In 1995, two licensed payday lenders operated 17 offices in the state and by 2008, the number of licensed payday lenders had grown to 530.
“At a time when more and more families are living paycheck to paycheck, we can’t stand by while Wisconsinites get trapped in a cycle of debt,” Hintz said. “Wisconsin families deserve basic consumer protections, and right now there is no bigger consumer protection issue than limiting the ability of predatory loan operations to take advantage of our citizens.”
Wisconsin currently is the only state in the country where there is no rate cap for licensed lenders, Hintz said. Fifteen states and the District of Columbia either prohibit payday lending completely or have established two-digit limits on interest rates.
Milwaukee Mayor Tom Barrett said he supports Hintz’s bill.
“Over the past decade we watched the number of payday lenders in our city and our state grow exponentially,” said Barrett. “Predatory lending has taken a serious toll on our community, and this legislation is long overdue. I look forward to swift passage of the Payday Lending Consumer Protection Act on behalf of Wisconsin families.”
The bill already has 36 Assembly authors and eight State Senate authors, Hintz said.
Source: bizjournals.com
