Wisconsin’s new law, introduced to end similar scams, was watered down in the political fray, then revised by Gov. Jim Doyle in a partial veto.
The new law does not cap interest on loans, or “fees” as the industry calls it, but limits the total payday debt by any individual to $ 1,500 or 35% of the borrower’s gross monthly income. . No interest can be charged on loans not paid when due. While not included in the Legislative Assembly version, Doyle also used his veto to ban auto title loans that put the family car at risk. A clearly readable summary by the Legislative Reference Office of the history of the bill and the provisions of the law is available online here.
Wisconsin payday lenders will need to acquire new licenses created for their operations, says Lisa Lee, an examiner at the Department of Financial Institutions, the state agency responsible for overseeing the industry and building a database to make this possible . Lee says she has heard both complaints that the new regulations will bankrupt lenders and discussions about consolidating the industry here. What happens remains to be seen.
She wasn’t surprised to hear what was going on in Montana. “That kind of rate would shut them down,” she said. In Wisconsin, three lenders were granted licenses after the new law was passed. The number of licensees making payday loans now stands at 482, according to the state’s online records.