Predatory payday lending is having devastating effects on our communities. It strips consumers of their income and traps them in a never-ending cycle of high-cost debt. Predatory payday loans wreck family finances, stripping American families with 4.2 billion dollars in excessive fees each year. In 2009, Wisconsin consumers paid 168.6 million dollars in payday loan fees. The number of licensed payday lenders in Wisconsin has increased sharply from 346 in 2004 to 530 in 2008 with an average of 3,325 loans per store.

The urgent need to stimulate the economy makes reforming payday lending a priority because it will put more cash back in consumers’ pockets.

§         Payday lenders profit from repeat borrowers, charging abusive fees and interest rates that surpass 400%.  The average borrower pays $800 to borrow $300. Consumers struggle to pay the loan back, fall behind on basic expenses and often seek taxpayer help from social service organizations and publicly funded government programs that provide food and assistance to cover rent and utilities.

§         There is no cap on payday loan interest rates, or limits on loan fees and the number of times a loan can be rolled over, adding additional fees and charges.  The problem for the borrowers—and the payoff for the lenders—is that the terms of these loans are designed to be very difficult to meet. The borrower must keep coming back and renewing their loan because they aren’t allowed to pay it down and can’t afford to pay it off.

 

Legislative Action Needed

§         Cap payday lending interest rates at a double digit percentage rate

§         Limit the number of rollovers on loans

§         Establish a database of all payday loans in the state of Wisconsin

 

WISDOM Religious Leaders Call
Predatory Lending
a “Moral and Religious Issue”

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 unpayable 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.