While the Senate on Tuesday backed off of highly criticized proposals to gut the state’s open records law and politicize the panel overseeing the retirement system, it left in place the deregulation of the payday loan industry, which critics refer to as predatory lenders.
“We are particularly disappointed by the last-minute insertion through Motion 999 of provisions to expand the power of predatory lending in Wisconsin,” Andrea Kaminski, executive director of the League of Women Voters of Wisconsin, said in a statement. “Payday lending traps many low-income people in compounding interest and spiraling debt.”
Critics say payday lenders fleece the poor by charging exorbitant interest rates, which cash-strapped borrowers are often forced to roll over into new loans.
The provision, part of the Motion 999 last-minute Republican budget amendments which drew howls from open government advocates and former and current public employees, was approved on Tuesday in the Senate version of the budget bill, which the Assembly is currently taking up.
While no legislator claimed responsibility for the proposal, the Milwaukee Journal Sentinel identified Chicago-based PLS Financial Services Inc., which has about 40 Wisconsin branches, as its main backer.
PLS spokesman Matt Swentkofske told the paper that the company wants to provide auto insurance and tax preparation services. But the motion goes further. The provision specifically authorizes payday loan companies to sell insurance and annuities and “any financial or consumer finance services subject to regulation by statue or rule.”
That, according to the Journal Sentinel story, could open up a world of possibilities.
“The vague language also seems to open the door for payday lenders to operate on their premises almost any business for which you might need a license, such as a barber shop, a liquor store or a casino, said David Liners, the executive director of WISDOM, an organization composed mostly of religious congregations that works on issues of social and economic justice.”
In a column, state Sen. Kathleen Vinehout, D-Alma, said the provision will “increase the ways payday loan companies can dupe unsuspecting consumers.”
Former Senate President Mike Ellis, who didn’t seek election last year, told the Journal Sentinel that there’s not overwhelming support for the measure.
"They're preying on those individuals that can economically ill afford to be taken to the cleaners," he said. "If that were a bill on the floor (instead of a budget provision), I doubt that it would pass."