May 27, 2009

524% annual interest? Not in my backyard

There are few things as ubiquitous as the golden arches of McDonald’s. Rarely is one more than a quick car ride away from the glorious greasy gut bomb of a quarter pounder with cheese or an order of mystery meat McNuggets.

But here in Wisconsin, there is one industry that has penetrated our communities, large, small and in-between, more than the ever-present home of the Hamburglar ‘ payday lenders. More than 500 payday lenders currently operate in Wisconsin; there are more payday lenders in Wisconsin than McDonald’s. Within walking distance from my apartment in Madison there are at least three payday loan predators (and only one McD’s).

Check ‘n Go! Check into Cash! Car Title Loans! Cash Advances! All different names for the same thing ‘ loan sharks. The average annual interest rate for a loan originating at a payday lender in Wisconsin is 524%. And if you can’t pay on time? Well, you can always roll the balance to next month, no problem! ‘ and of course pay more fees and interest. And if you get really stuck? These predators could take your car, making that ride for fries a lot more difficult.

The worst part of it all? These predatory lenders have operated for years in Wisconsin unchecked; Wisconsin is the only state in the nation without caps on the amount of interest payday lenders can charge consumers. The Wild West of Loan Sharking! Wisconsin Pride!

Not to say we haven’t tried to reign in these outlaws. Last session, Rep. Tom Nelson (D-Kaukauna) introduced legislation (2007 AB 211) that would have regulated payday lenders and capped interest rates. What happened to that bill? The Republican-controlled Assembly wouldn’t even give it a public hearing.

Now that Wisconsin has leadership in both houses of the legislature that actually cares about working families, the bill is back on the table and has strong support. This morning, now-Majority Leader Nelson and Rep. Gordon Hintz (D-Oshkosh) introduced a new bill, the Payday Lending Consumer Protection Act that will regulate these loan sharks and help protect Wisconsin consumers. They were joined by a big crowd in the Assembly parlor to announce the bill’s introduction that included people representing business, working families, religious groups, seniors and financial support groups.

Need more proof that we need to protect consumers from payday lenders? Check out some of these heartbreaking stories of folks who fell into the debt cycle at a payday lender collected by La Casa de Esperanza, a Waukesha-based organization that works to help low-income individuals achieve full social and economic participation in society.

In these though economic times, it’s more important than ever that we protect working families in Wisconsin ‘ and the Payday Lender Consumer Protection Act is an important step in curbing these predatory lenders and helping families stay out of Check n’ Go’s debt trap. We’ll be following the bill closely, so make sure to follow OWN on Twitter or check back with the blog often for updates!