Friday, June 30, 2006

Looking for a Wisconsin payday loan? You may need to drive a bit further in order to get it.

The Journal Times reports that a plan to restrict the location of payday loan stores in Racine is headed to the City Council next week. On Wednesday, the city's Plan Commission approved adopting an ordinance that amends the existing zoning codes, making it more difficult to open convenient cash advance loan stores in the city. 

This is something Alderman Greg Helding said should have been done a long time ago. Helding, a Plan Commission member, and Alderman Aron Wisneski pushed the payday loan issue onto the agenda.

"Essentially, they're bad," Helding said. "All indicators I have seen show them to have a detrimental effect on neighborhoods, especially when they cluster."

There will be a public hearing during the City Council meeting July 5.

Helding said he has been surprised at the lack of opposition by members of the City Council. He said he also hasn't heard any opposition from payday loan company owners. Right now, there are 16 payday loan stores in Racine.

"The city is pretty well saturated, which is why we really are supporting the idea of this ordinance," said City Development Director Brian O'Connell, created a map illustrating where the payday loan stores are located throughout the city.

Previous attempts to regulate lenders of pay day loans were vetoed a bill in 2004 that he said was too weak.

The bill Doyle vetoed included a maximum payday advance amount of $5,000 and a limit on payday loan rollovers - but no enforcement mechanism for that limit or a limit on the number of loans a borrower may have out at one time.

Currently, payday cash advance lenders are subject only to the state's loan licensing statutes. Carrie Templeton, an assistant with the state's Department of Financial Institutions, said Wisconsin has some of the weakest laws in the nation in terms of consumer protections from quick payday loan lenders.

"We're interested in stopping consumers from getting into the spiral of debt," Templeton said. "We don't want to outright ban payday lenders. But we feel it can be done responsibly without taking advantage of consumers."

While the city can't ban the businesses, which are legal, it can use its zoning laws to restrict where they operate. This could lead to more use of the Internet and faxless payday loans, but it's a start nonethelss.

This entry was posted on Friday, June 30th, 2006 at 7:35 am and is filed under Wisconsin.