Payday Lending Industry Gave $75,000 in Political Donations in 2009
Madison – The payday lending industry donated almost $75,000 to the political coffers in 2009 as they attempted to fight efforts to regulate the industry. The donation amount is the largest ever recorded for a non-election year.
The payday industry also moved the focus of its donations from Republicans, whom lenders typically endorses, to Democrats, who gained control over the state Legislature in 2009, according to the Wisconsin Democracy Campaign’s report. The organization lobbies to limit the amount of special-interest money in political campaigns.
Wisconsin is the only state in the country that does not regulate cash advances, which can charge borrowers interest as high as 500 percent or more per year.
Where the Money Went
The bulk of the donations went to campaign committees controlled by lawmakers in the Legislature.
Among individual politicians, Governor Jim Doyle, a Democrat, received the most industry money, accepting $8,120. He has asked legislators to pass the strictest bill possible.
Senator Jim Sullivan (D-Wauwatosa) and Senator Pat Kreitlow (D-Chippewa Falls) each accepted $2,500 from payday lending representatives, the highest amount among lawmakers. Sullivan chairs the Senate Financial Institutions Committee and is the primary sponsor of a bill to limit cash advances to $900, prohibit borrowers from renewing short-term loans more than once, and restricting where lenders can locate.
As cash advance representatives dumped money into political campaigns, the business as a whole devoted $699,000 on lobbying efforts to stop regulations.
The political donations arrived after industry leaders spent $149,150 in 2008 on campaigns, the highest level of donating in at least ten years.
In February, the Wisconsin Assembly passed a law that would restrict advances to a $600 maximum or 35 percent of biweekly income, whichever is lower; prohibit vehicle title loans; and bar people from rolling over a balance from paycheck to paycheck.
Lenders say that the bill goes too far, while advocates for the poor and religious organizations claim it would be ineffective because it does not limit interest rates to 36 percent per year.
The Assembly passed the law right after Speaker Mike Sheridan (D-Janesville) admitted that he had dated a lobbyist for the payday loan industry at the same time he publicly switched his stance to oppose a cap on interest rates. The lawmaker claims he changed his position before dating Shanna Wycoff, an Axcess Financial lobbyist, and that they are no longer together.
The Senate should revisit the regulations next month as the Legislature wraps up its traditional legislative session. It is not certain whether the two houses can agree on a bill to send to Doyle.