DAVE ZWEIFEL | Cap Times Editor Emeritus
The Consumer Financial Protection Bureau, the new federal agency that aims to protect consumers from unscrupulous money changers, published a disturbing report earlier this month on one of my favorite targets: payday lenders.
It appears that payday lenders, who seem to have more lives than a cat, have exploited loopholes in the military loan law, which limits interest rates to 36% on loans made to military personnel.
One of the main problems is that the law defines payday loans as loans of 91 days or less. So smart payday lenders write the loans for over 91 days and then charge percentage interest rates they can get, sometimes over 500%.
This should not have surprised neither the military establishment nor the CFPB, however. This is exactly what the industry has done in Wisconsin to avoid our already weak payday loan regulations, regulations made even weaker by this Republican-controlled legislature and a governor who cares more about the interests of the people. big companies and the money they hold only poor families trying to make ends meet.
To be fair, Democrats in the Legislature have been as bad as Republicans at tackling the problem. But they eventually passed a bill in 2010 (Wisconsin was the only state in the country without a payday loan law at the time), when they controlled both houses of the legislature. The bill capped interest rates to 36% and, among other provisions, prohibited businesses from rewriting a loan more than once, a practice that often increased the already obscene interest and fees, causing the borrower to get into more and more debt.