Lobbyists with the Wisconsin Credit Union League expect tosupport a rate cap of 36% on payday loans but pointed out beforeformally supporting the law that the state's credit unions arealready fighting the problem.

“Because not-for-profit credit unions exist to serve members,not drive profits, a credit union offers loan terms in members'best interest,” said Brett Thompson, president/CEO of the WisconsinCredit Union League.

The bill scheduled to be introduced in the legislature would capinterest rates on consumer loans at 36%. Lawmakers have expressedconcerns that payday lenders target low-income areas and the highinterest loans has trapped consumers in debt.

Thompson said credit unions, however, have helped members withpayday loan alternatives that not only typically cost less thanhalf what nontraditional lenders charge but also encourageborrowers to begin saving, receive counseling and make betterchoices to transition into more traditional loan products offeringlower rates. He said just a handful of credit unions pioneeredpayday loan alternative programs a few years ago, but now thenumber of credit unions offering such programs has grown more thaneightfold, to more than 60.

A lobbyist for the league said this will be the second time thelaw has come before Wisconsin lawmakers, and he expected that itvery well may do significantly better.

“There has been a sea change politically in the legislaturesince the last session,” explained Tom Liebe, vice president forgovernment affairs for the league. Democrats now control bothchambers of the legislature and the governor's office and couldvery well be more open to legislation capping payday lendinginterest, he added.

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