Governor Strengthens Payday Lending Bill

Posted by Amy on Wednesday, 19 May 2010

The push to reform payday lending in Wisconsin took an interesting turn as Governor Doyle used his veto power to strengthen the bill approved by the Senate and Assembly before signing it into law. The Governor notified the Legislature on Tuesday a number of changes were made to eliminate loopholes and better protect consumers from predatory lenders in Wisconsin.

Many of the original legislative provisions remain in the new law. Payday lending customers are restricted to one loan at a time, and are limited to borrowing the lesser of $1,500 or 35 percent of gross monthly income. The loan may be rolled over only once. If a borrower is unable to pay off the loan, the lender would be required to offer the option to repay over four pay cycles. The new law maintains the zoning restrictions to payday lending businesses, and creates a database to monitor loans and enforce restrictions in the state.

Through his veto pen, the Governor banned all auto title loans and imposed a tighter definition on the practice of payday lending in Wisconsin. Consumers are allowed to repay a loan in four equal installments, but a lender cannot charge additional interest on that loan. Consumers will be given that option each time they take out a loan, instead of just once a year. Finally, the Governor granted the Department of Financial Institutions new regulatory powers to monitor and enforce short term, high interest lenders in our state.

The new law does not contain an interest rate cap. At the same time, the Governor made significant improvements that will tackle many of the abusive and predatory practices of payday lenders. Many thanks to LOPPW advocates for engaging their legislators and working to enact meaningful payday lending reform.

For those of you planning to attend your synod assembly, make sure to stop by the LOPPW table to say hello and learn more about this ministry. Your voice can make a difference in the lives of our neighbors!