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News Now

CU System
Wis. payday loan rules could affect short-term loans
MILWAUKEE (11/15/10)--Wisconsin credit unions are exempt from the state's new rules for payday lenders, and the Wisconsin Credit Union League will monitor the development of the rules, while some lenders say the rules could impact short-term loans by banks, credit unions and other lenders. An article on Milwaukee Magazine's website said lenders were criticizing the new rules against predatory lending, saying that the rules "could also restrict the ability of banks, credit unions and other lenders to make small, short-term loans" (milwaukeenewsbuzz.com Nov. 12). The Wisconsin Financial Services Association, which represents the state's consumer finance industry, including sub-prime lenders, questioned the rules being drafted by the state Department of Financial Institutions (DFI) to carry out legislation passed earlier this year. However, the league told News Now that credit unions are exempt. "The new payday loan statute is plain on its face and not-for-profit credit unions are expressly exempted from these regulations," said Tom Liebe, vice president of government affairs at the league. "As the vast majority of Wisconsin credit unions already make small dollar loans to members in need, we will continue to monitor the rule development and take any action necessary to ensure credit unions can continue to meet those needs," he in an e-mail. Under the rules, no loan under $1,500 could have a term shorter than 90 days or an "open-end" credit plan where interest accumulates until the loan is paid off, said the article. The rules limit the number of customer checks a payday lender can hold for a loan to five. One rule requires payday loans to have uniform payments, while another prohibits payday lenders from entering into "open-end" credit plans with consumers. The law also caps the amount anyone in the state can borrow from a payday lender, including interest, at $1,500 and requires the DFI to set up an online database for lenders to check how many outstanding payday loans a customer has.


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