Interest Rate Cap Proposal Gains Support

Wausau Daily Herald
August 10, 2009
Spoto, Cara

Legislation penned by Wisconsin Rep. Gordon Hintz (D-Oshkosh) to rein in payday lenders has not been formally introduced but is steadily picking up support from fellow lawmakers. So far, 15 state senators and 43 Assembly members have added their names as co-sponsors of the measure, which would limit annual interest on small, short-term loans at 36 percent. That is a sizable switch from rates of as much as 525 percent currently being charged for payday loans in Wisconsin, which has seen the industry grow by leaps and bounds over the past 15 years or so. "At the beginning of my service in the state Assembly, payday lending was pretty much nonexistent in our state," according to Rep. Louis Molepske Jr. (D-Stevens Point), one of the dozens of Assembly members who have signed on to the Hintz bill. "Today, it has spread like wildfire, especially in the central Wisconsin area." The industry became active in the state in 1993 and, as of the close of 2008, there were roughly 530 payday lending institutions in Wisconsin. While the quick-cash loans are meant to be repaid in two weeks' time, consumer advocates complain that many borrowers are forced to roll over the loans multiple times because the fees soak up too much of their income.

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