Wisconsin faith leaders and consumer advocated spoke out against payday lending Tuesday, in anticipation of new federal rules on the industry. The federal Consumer Financial Protection Bureauis expected to release new rules on payday lending this spring.
In 2014, there were 116,848 payday loans made in Wisconsin, according to the state Department of Financial Institutions. The average interest rate was 589 percent, although the state doesn’t have an interest rate cap on payday loans.
The Rev. Marian Boyle, of Green Bay’s West Side Moravian Church and the interfaith organization JOSHUA, said these loans create a cycle of debt.
Stay informed on the latest news
Sign up for WPR’s email newsletter.
“It’s a short-term fix that creates a bigger problem long-term,” she said.
Pete Koneazny, litigation director at the Legal Aid Society of Milwaukee, said he wants to see tighter regulations for payday lenders and alternatives for small-dollar loans.
“We’re hoping that eventually we’ll have more sources of credit unions and others that will do loans where they actually are careful about giving loans that there’s a plan for somebody to succeed in the loan rather than to fail,” he said.
Democratic state Rep. Gordon Hintz, who has led the fight against predatory lenders in the state Legislature, said he’s hopeful that the federal CFPB will create meaningful regulations on industries like payday and auto title lending.
“The poverty industry, which is the industry that profits off the misfortune of people struggling to get by really exacerbates the income inequality because the cost of being poor is much higher than the cost of being stable financially,” Hintz said.
