The Democrats in the Wisconsin Legislature just can't handle what every other state legislature has already done: regulating payday loan sharks.
Too far gone
By
Dave Zweifel
The payday loan industry looks like it's going to get its way - yet again.
After being lavished with campaign contributions and buttonholed by an army of lobbyists, enough of our state legislators are apparently going to make sure Wisconsin remains the only state in the nation that doesn't regulate an industry that lends money for two weeks at a time, frequently extends balances for big fees, and winds up getting as much as 520 percent interest on its loans.
The targets are the elderly on fixed incomes and the working poor, not to mention young off-duty soldiers and sailors.
But rather than stand up to an industry that has been preying on the most vulnerable among us, the once-proud Wisconsin Legislature is going to give yet another pass to a special interest that can afford to hire dozens of high-powered lobbyists and flash enough cash around to make any honest politician squirm.
This became obvious last week when Assembly Speaker Mike Sheridan, once a blue-collar union leader who championed working people, said that the bill to impose a 36 percent cap on payday loans "goes too far." So he shipped the bill to an Assembly committee whose members have already indicated that they don't see a need for an interest-rate cap.
The industry has convinced legislators that a cap would put them out of business and, as a result, their former customers would bounce checks, which would cost them more in bank fees than the payday lenders charge.
The nonprofit Center for Responsible Lending begs to differ. Legislatures that have passed payday loan regulations without interest caps have failed to rein in the predatory lending. An interest rate limit, enacted by 15 states and the U.S. military around its bases, is the only measure that has proved effective, the center has reported.
Besides, studies have shown that there is no increase in bounced checks when payday lenders are restricted. Rather, it's been shown that payday lenders actually cause more bounced checks. Two-thirds of the states without payday lending actually pay less than the national average in overdraft fees.
In a column several weeks ago that detailed how lawmakers have taken more than $158,000 from the payday lending companies, I wrote that we would see just how much those campaign contributions count.
Well, we're seeing the results now.
(This article originally appeared in the opinion section of the Capital Times.)
October 18, 2009
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Dave Zweifel is editor emeritus of the Capital Times and a FightingBob.com contributing editor.
