Predatory Lending

many attachments at bottom of page! (3/10/10)
MICAH CUSH JOB RIC SOPHIA ESTHER JOSHUA JONAH AMOS NAOMI


February 8, 2010 
For Immediate Release Contact: David Liners (414) 831-2070 
or Ken Hall (262) 898-9741 
3767 E. Underwood Ave., Cudahy WI 53110, 414-831-2070, 
Fax:414-831-2071     Email: wisdomwi@sbcglobal.net 

The Gamaliel Foundation in Wisconsin

WISDOM Religious Leaders Call Predatory Lending

a “Moral and Religious Issue”

Values Statement

As an organization of people of varied faith traditions, WISDOM believes that the regulation of lending practices in Wisconsin is a moral imperative. All of our faith traditions have a core belief that it is wrong for anyone to profit from the desperation of the most poor and needy on our midst. For example, the prophet Isaiah (3: 13?15) says:

The LORD arises to contend,
And stands to judge the people.
The LORD enters into judgment with the elders and princes of His people,
‘It is you who have devoured the vineyard;
The plunder of the poor is in your houses.
‘What do you mean by crushing My people
And grinding the face of the poor?’
Declares the Lord GOD of hosts.


The Predatory Loan industry, often charging in excess of 500% interest on loans to the most economically disadvantaged among us is clearly guilty of usury. Our own experience has shown us countless examples of needy people – often members of our religious communities – who have thought they were getting short?term help for a specific need, only to find themselves trapped in an endless cycle of interest payments and rollovers, until they have lost everything.

We believe that it is imperative for the state of Wisconsin to enact serious regulation, which will cap interest rates, limit rollovers, and ensure that individuals will not be crushed by interest and un-payable debt. This is a political and economic issue, to be sure. But, it is a clear moral and religious issue – one that is addressed directly by the Sacred Scriptures and teachings of every one of our religious traditions.

No amount of lobbyists or campaign contributions can erase the clear moral and ethical imperative for our leaders to protect the needy from the unscrupulous.

WISDOM is comprised of 10 local congregation based organizations around the state of Wisconsin. It includes more than 140 congregations, or 17 different religious traditions. WISDOM gathers diverse people to build stronger, responsible communities.

WISDOM Calls on the Wisconsin Legislature

to Rid our State of Predatory Lending

“While we are encouraged to see the Assembly working to curb the payday
lending industry, without an interest rate cap these measures will not do enough
to make an impact on the harmful effects these loans have on our communities.”
- Nancy Holmlund, WISDOM President


Milwaukee, Waukesha, Kenosha, Racine, Beloit, La Crosse, Eau Claire, Wausau, Green Bay, Appleton and Oshkosh: WISDOM, a statewide interfaith justice organization with over 140 congregations from 17 faith traditions calls for an end to predatory payday lending practices in the state of Wisconsin.

On Tuesday, February 9th members of the state legislature will announce a predatory payday lending bill that falls short of measures to enact sufficient regulation on an industry that has been allowed to engulf our state and take advantage of those with economic strains. While limiting rollovers and allowing only one loan at a time will have an impact, there is great concern that the industry will find loopholes around the proposed legislation. This has been demonstrated in other states across the country; without a rate cap, we are not guaranteed that the predatory practices of payday lenders will be ended.

The Predatory Loan industry, often charging in excess of 500% interest on loans to the most economically disadvantaged among us, is clearly guilty of usury. Our own experience has shown us countless examples of needy that thought they were getting short?term help for a specific need, only to find themselves trapped in an endless cycle of interest payments and rollovers, until they have lost everything.

We believe that it is imperative for the state of Wisconsin to enact serious regulation, which will cap interest rates at a double digit number, limit rollovers, and ensure that individuals will not be crushed by interest and un-payable debt through the creation of a database to monitor the payday lending industry.

No amount of lobbyists or campaign contributions can erase the clear moral and ethical imperative to protect the needy from the unscrupulous.

Ken Hall, Racine County Supervisor adds, “Our entire board strongly supported protecting all Wisconsin citizens and families against exploitative lending by returning to an interest rate cap, something short of that is likely another sweetheart deal for the industry and its lobbyists.”




Guest Opinion by

Jennifer Johnson, Senior Legislative Counsel
Center for Responsible Lending

February 10, 2010

Legislative capitulation, not compromise on Wisconsin Payday Reforms

Earlier this week, Wisconsin lawmakers working on alleged reforms to the small dollar loan industry practices announced their proposed compromise legislation.  As Wisconsin is a state included in my duties as senior legislative counsel with the Center for Responsible Lending, I feel compelled to respond to the Assembly Financial Institutions Committee Work Group's developments. 

In CRL's view, there is a very real difference between compromise and concession. The fact that some legislators do not seem to know that difference is a disservice to the people of Wisconsin. At a time when the average American worker is already frustrated with billion dollar bailouts of banks, Wall Street and other financial institutions, it is inexcusable for public servants to be more concerned with the profit margin of the industry than with the fairness of credit terms affecting their own constituents. 

Forget the smoke screens like databases (with no accurate reporting requirements and a prohibition against public scrutiny), rollover bans or a 15 minute pause before signing for a loan decision - These and other distractions do not address the crux of Wisconsin's small loan issue: the lack of any interest rate cap in the State of Wisconsin. It is a shame that the compromise Work Group could not come up with any double-digit APR that they deemed responsible for small dollar lending in Wisconsin - even 75, 99, or 150 percent  APR. 

Equally important, this compromise only addresses the payday practice. Without a small loan cap, Wisconsinites will still be subject to any number of predatory small loan products such as predatory installment loans, open-end lines of credit, credit service organizations, etc.  These products are used by the industry in other states to circumvent enacted reforms.

But in the interest of providing clarity in this still-unfolding public date, I would like to briefly review the key proposed 'reforms':

  • Ban on vehicle title loans - This provision defines car-title loans as 90 days or less. It is not only possible but probable that the industry will simply make 91-day or longer loans.  But because this provision doesn't fit the industry's preferred model, I doubt the General Assembly can stand up to the car-title industry lobbyists. I predict this provision not make it to the Governor's desk.
  • Limit payday loans to a maximum of $600 or 35% of gross biweekly income, whichever is less - This 'reform' is a ruse that actually expands the current industry standard loan amount of $500. Neither provision however, takes into consideration the borrower's other debts - which would be essential to true responsible lending), I would also anticipate that if enacted, the payday industry would next seek to cut the 35% income guideline. 
  • One payday loan at a time - The industry practice is to offer a two-week payday loan that can be flipped 26 times in one year through back-to- back lending, an industry practice that technically 'avoids' "rolling over" the loan.  Hence, only one loan still has the potential to drive a Wisconsin family into bankruptcy. Most importantly, there is no requirement to give consumers the ability to put existing loans in payment plans to wind them down and actually comply with the one-loan provision.  I predict the industry will be successful in grandfathering existing loans. So, Wisconsinites with multiple loans will still be mired in triple digit interest rates on multiple loans.
  • Database of all payday loans The industry would be given legal license to report whatever information they chose with no ability for an independent third party to review, nor be available under the state's public records law.  Databases information can easily be made public without revealing any borrower personal information or industry proprietary information. 

If this House version of 'reform' passes, there is an even greater likelihood that it will either be weakened further, or fail altogether in the Senate. Wisconsin's upper chamber has been eerily silent on this important consumer protection issue.

Perhaps capitulation, not compromise, is a more accurate description of these legislative developments. The fact that no rate cap is now proposed to guide and govern small dollar lending in Wisconsin should be unacceptable to every consumer.

The one clear compromise has been the trust that Wisconsin voters gave their legislative officials - elected candidates who were entrusted to represent citizen concerns. Without a small loan cap, Wisconsinites will be subject to any number of predatory small loan products such as Illinois' predatory installment loans, open-end lines of credit, credit service organizations, etc.

With all of the loopholes punched into this so-called reform proposal, the people of Wisconsin now have a bill that looks like Swiss cheese. The holes and what's missing are the real story.

Jennifer Johnson can be reached at Jennifer.johnson@responsiblelending.org


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Sophia Webmaster,
Mar 9, 2010, 5:34 PM
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Sophia Webmaster,
Mar 9, 2010, 5:34 PM
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Sophia Webmaster,
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Sophia Webmaster,
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Sophia Webmaster,
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Sophia Webmaster,
Mar 9, 2010, 5:34 PM
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Sophia Webmaster,
Mar 9, 2010, 5:35 PM