Cooperatives Push to Stop Predatory Payday Lending
MADISON, Wis. (May 29, 2009) – Wisconsin’s cooperatives are once again looking out for the best interests of consumers by advocating legislation that would curtail the predatory lending practices of payday lending institutions.
The state’s lawmakers will begin looking at a draft bill called the “Predatory Lending Consumer Protection Act” that would cap interest rates charged on consumer loans at 36 percent annually. Currently, Wisconsin is the only state where no interest rate cap exists, and payday lenders are free to charge exorbitant rates of 525 percent or more on top of large fees.
“Cooperatives look out for the best interests of their member-owners,” said Cooperative Network President and CEO Bill Oemichen. “Cooperatively-owned credit unions offer a solid alternative to payday lenders with lower loan rates, financial counseling, and accessible credit. They offer a needed escape to this never-ending debt cycle.”
According to the Wisconsin Credit Union League, all credit unions offer members small loans that entirely prevent the need for the average member to use traditional payday lenders. For example, while the Federal Reserve considers the minimum profitable loan to be $2,400, almost 90 percent of Wisconsin credit unions would grant a $500 loan to help a member and more than 75 percent of them would make a loan of just $100 – all without the excessive costs traditionally charged by payday lenders.
Cooperative Network is a leading Wisconsin business association. It serves more than 600 member-cooperatives, owned by more than 6.3 million Wisconsin and Minnesota residents, by providing government relations, education, marketing, and technical services for a wide variety of cooperatives including farm supply, health, dairy marketing, consumer, financial, livestock marketing, telecommunications, electric, housing, insurance, worker-owned cooperatives, and more.
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