Anyone with a little gray hair who has known Wisconsin for a lifetime can’t help but feel that we’re being taken on some Clarence Oddbody alternate reality tour. This can’t be Wisconsin. Must have gotten some bad liquor.
That feeling swept over me again this week when we issued a report showing donations from so-called "payday lenders" to four campaign fundraising committees controlled by legislative leaders. It was hard not to notice both the size and timing of the donations. Three-quarters of the money given to the Assembly Democratic Campaign Committee, for example, was delivered either the day before or a few weeks after Assembly Speaker Mike Sheridan announced he no longer thought it was a good idea to limit the interest rates on cash advances and other forms of payday loans. A 36-percent rate cap goes "too far," the speaker informed us.
This in a state that for years and years had usury laws that limited the interest any financial institution could charge to 18 percent. In 1996, this law was passed by the legislature and signed by the governor repealing the limit. Not coincidentally, the number of payday lending establishments has skyrocketed, growing from just a handful in 1996 to well over 500 today. Not coincidentally, these outfits now charge interest rates routinely exceeding 500 percent.
Wisconsin used to have meaningful consumer protections and a vibrant financial sector with countless locally owned lending institutions. Now we have legalized loan sharking and financial institutions mostly controlled by out-of-state interests.
Get us back, Clarence. Get us back.
Mike McCabe is executive director of the Wisconsin Democracy Campaign, a Madison-based, nonpartisan watchdog organization that tracks the impact of money in politics.