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On Wednesday, April 21st, the Wisconsin State Assembly passed an amended version of the Senate-passed payday lending bill. Rather than standing up for Wisconsin consumers and passing a strong bill, legislative leaders have settled for compromise legislation that will not solve the payday lending problem. The Senate is scheduled to take up this bill today.
“While our respective agencies acknowledge the Assembly’s attempts to improve the Senate’s bill by adding auto title regulations and tightening up portions of the remaining language contained in SB 530, without the 36% rate cap, this bill is weak at best,” said Jeanne Benink of AARP.
Patchwork reforms similar to SB530 and AB447 have been attempted in other states and have failed at halting the predatory practices of these products. For example, Oklahoma and Florida have passed reforms similar to what is being considered in Wisconsin, including loan limits, repayment plans, databases, no loan renewals. Data from these states since enactment of their “reforms” show that payday loans continue to be a debt trap. (More information on the on-going problems with payday lenders in these states can be reviewed in the Center for Responsible Lending’s report, Phantom Demand.)
A vast majority of states have taken action on payday lending, and the evidence is overwhelming. Evidence from these states has shown that a rate cap is the cleanest and most effective way to enact reform because it regulates small consumer loans, protects consumers in need of responsible loan products, and prevents the industry from morphing its products to evade the law.
“With overwhelming evidence from states as to what works legislatively, Wisconsin consumers should be curious why their legislators have not advanced an effective policy that gets the job done,” said Bruce Speight, WISPIRG Director. “Wisconsin consumers deserve better than this.”
A coalition of public interest organizations and consumer advocacy groups including: AARP, WISDOM, The Legal Aid Society of Milwaukee, WISPIRG, Wisconsin Council on Children and Families, Wisconsin Alliance for Retired Americans, Consumer Action, Madison-area Urban Ministry, Coalition of Wisconsin Aging Groups, Community Action Coalition for South Central WI Inc. have sent a clear and consistent message to both chambers of the Wisconsin Legislature that Senate Bill 530 is NOT reform.
Throughout the debate advocacy groups have advocated for a rate cap, the cleanest and most effective means of regulating the payday and auto title lending industries and have explained to Legislators why SB 530 and to a lesser extent AB 447 are filled with loopholes that will make both bills ineffective. Unfortunately, Legislators have rejected both a rate cap and alternative suggestions that would make this bill a meaningful and substantive reform.
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