“Desperate consumers fall back on these loans to get their bills, but are often stumbled by prohibitive interest payments,” wrote Kiel.
The entire payday loan industry, notorious for charging interest rates of 500 percent or even higher, is hunting the misfortunes of the nation’s poor.
Yet few legislatures, including Wisconsin’s, are willing to legislate meaningfully without realizing how these subprime lending services are exploiting the people in need of financial aid most.
No party in Wisconsin is without guilt. The Democrats tried to make some meaningful regulation when they controlled the legislature eight years ago, but their own party’s legislative leaders sabotaged the attempt and gave in to the powerful payday loan lobby. Governor Jim Doyle was able to keep a 36 percent interest rate cap on the loans through his veto in the position, but when the Republicans took over after the 2010 election they took up the issue again, defining payday loans as loans for less under the condition of 36 percent than 90 days.
The lenders aren’t stupid of course, so now they just write the loans for at least 91 days to avoid the interest rate cap.
Certainly, one would think that there was no intention of contributing to the racial wealth gap in Wisconsin, but in reality the action did just that.