Legislation Introduced in Wisconsin
August 28, 2009 | Wisconsin, local issues, regulation | Comments (3)State Rep. Gordon Hintz has introduced legislation to cap interest rates in Wisconsin at 36%, which would effectively ban payday lending and leave consumers with a need for short-term, small dollar loans out in the cold.
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“Hintz says the way the industry currently works locks individuals in a never ending cycle of debt, where the money they owe exceeds their income. He says it’s a busienss model that helps the industry make billions of dollars, while keeping low-income residents from making any progress.”
That may be the dumbest thing I’ve heard about this issue! Lenders do want to get paid back – right? No lender or borrower in their right mind would lend/borrow more than they make.
The growth of this industry is caused by demand. Did Hintz ever take any basic business classes?
Billions of dollars??? Has he taken the time to review any public company’s stats or ask a private WI company to discuss their profit and loss statement with him?
Has he asked the consumer if these places hold them back or help them? My guess is their perspective is different from his (unless he’s recently been in need of a few hundred bucks to get his car fixed).
Has he asked them what they’ll do for short-term credit when these lenders close up because they can’t make it on $1.38 per $100 for two weeks? Think about it… if one loan goes bad (some are bound to that’s how the credit game works) they’ll have to have 100 more pay back on time to just break even. Don’t worry about paying the employees or rent or utilities or…. taxes.
Surely there is a better solution than an effective ban or is this just an issue of politically motivated grandstanding… that never happens… does it?
I’ve voting for grandstanding.
What happens when short-term credit options dry-up?
The consumer will still have a need and demand, which will force them into the world of unlicensed, unregulated lenders on the internet. The consumer will give up all control of thier bank account to a company that is in “god knows where” and pay approximately $30 per $100. Makes alot of sense…
On the flip side, Mr’s Hintz will be able to grandstand and say the “number” show that I have done this great thing and helped people our the the evil PDL trap, just look at these numbers from the WDFI. The number of loans have dropped by 90%!!!
Again, the truth is not that the consume has all of the sudden not needed the option, but instead forced to go “underground” to borrow!!! Seems just like Prohibition!!!