Wisconsin lawmakers agree to enact new rules for payday lenders

By Scott Bauer (AP)

Madison, Wisconsin-

Wisconsin lawmakers for the first time arrived on an agreement to frame new rules for the payday lending industry.  They have also decided to turn around the ailing industry after enactment of new rules.

The measures were finally passed on late Thursday during a long Assembly session that started in January, 2009. After the approval, the bill was sent to the Governor Jim Doyle for making it an act. Many bills such as promotion of the renewable energy sources, deregulating the landline telephone industry and amendment in the Wisconsin Voting laws were not passed by the assembly during this time.

The new rules on payday loan stores came into effect after a year long hot debate and pressure by the industry. Wisconsin was the only state, which had not regulated the loan stores so far.  Consumers said that, due to lack of an effective legislation, many people has fallen into the debt traps of the payday lenders. These lenders had been charging the borrowers with high interest rates.

The leader of the Assembly house Thomas Nelson D-Kaukana described this bill as the most effective measure to protect the rights of loan customers. D-Kaukana also told that,  the bill was not exactly as he expected, but a compromise formula needed to get approval of assembly. He told that with this approval, the malpractices of the lenders can be effectively curbed. He further told with new regulation, no further case of consumer being victimized with malpractices  would be heard.  

Those advocating for poor people said that the bill did not come up to the desired level because lawmakers did not agree on imposing ceilings on the loan rates.

According to the new legislation, the maximum sum of the payday loan will be $1,500 or
35% of the borrower’s monthly income, whichever is less.  Borrower can delay the payday loan only once and payday loan store cannot be situated within 1500 feet of another or 150 feet of residential areas. The cancellation of loans can be made within 24 hours. A person can draw only one auto title loan from a lender. The approved fund under this scheme cannot be more than 50% of the car valuation, excluding fees.

Doyle told in the beginning of this week, that, he preferred approval of bill in any form for regulating the malpractices of  the industry. The bill was passed with 72 members in its favour and 25 members in its opposition.  Senator Jim Sullivan, D-Wauwatosa, described the bill approval as a comprehensive step to regulate the industry.

Lenders lobbied hard against this regulation. They spent $669,000 last year to prevent the passage of the bill.  Donation of $75,000 to state lawmaker’s compaign committees was also given by the lenders.

Assembly Speaker Mike Sheridan told that, Cincinnati-based Axcess financial, which controls Check ‘n’ Go stores tried to influence him in January. Sheridan earlier supported the rate cap, but opposed this provision during the voting time.

The other legislation on the last day of assembly session:

FAILING SCHOOLS:

A bill for the struggling schools in all districts of Wisconsin province including those in largest district of province, Milwaukee was passed by the assembly. The approval came on a 50-47 vote.

The new act will arm the school boards and Wisconsin’s education superintendent with more power to interfere into the business of least performing schools in the province.

The school boards are required to send teachers and enforce a common curriculum in   all districts, where problems schools are located.  

The new act also allows the school boards to extend the learning time in the problem schools. The falling schools will be asked to frame new standards for assessing the performance of teachers and principals with the key stress on the academic improvement.

Republicans argued that the new rule won’t be able to change the learning culture. But democrats said this act will certainly bring right changes in the education level of worst performing schools.

Doyle said that this bill would be a major step for Milwaukee’s education system. Therefore, he will sign this bill.