Democrats Fail Again - 36% Cap On Interest Rates Is Obviously Too Restrictive

For years I refused to contribute to both the Democratic Assembly and Senate Campaign Committees.  The handling of payday loans is a reminder why I very selectively donate to Democrats.

This week's compromise on the payday loans is a clear cut example of the problem. The New York Times reported:

The plan would not cap the annual interest rate that lenders could charge on loans, unlike a previous bill that would have limited them to 36 percent.

That fairly well describes the situation as to how the Democrats stand on this issue. For those who need additional  edification:

 Rep. Donna Seidel, D-Wausau, said the cap would have gone too far in choking off credit for borrowers struggling in the economic downturn by essentially wiping out the industry.

What is wrong with wiping out the industry? As for the borrowers, allowing this usury practice is no favor. Wisconsin borrowers did just fine when interest rates were capped at 18% and these predatory lenders were not fishing in Wisconsin waters.

Maybe the legislature could figure out some innovative ways to fix this problem along with greater support for financial literacy programs.

 

 

Comments

[Steve Vokers]

According to this chart from the National Conference of State Legislators, there are a number of states with rate caps lower than 36%:

http://www.ncsl.org/default.aspx?tabid=12473

One wonders whether it has driven payday loan sharks, er, stores out of those states? And if not, why would it do so here?

Insert gratuitous mention of "in bed with the lobbyists" here...

[freelunch]

Why have we legalized loan sharks?

I do understand that some people get into financial problems, but allowing lenders to make it worse for those people shows how indifferent our legislature is to the needs of the working poor.

Our assembly speaker shames us all. I hope the Democrats have the gumption to get rid of him in a primary so the GOP doesn't get an easy pickup.

[nonheroicvet]

How about some more names? I read this blog daily and am frustrated by situations like this where outrageous legislative conduct occurs and few if any names are attached even though the votes should be a public record. Help me out Paul.

[Patrick Fuchs]

nonheroicvet:

From what I understand, the cap was in the bill when it went to the Assembly Financial Institutions Committee. These 6 Democrats moved the bill to the Rules Committee without the cap (it was a 6-5 vote along party lines; all Republicans voted against):

Representative Jason Fields (Chair)
Representative Jeff Smith (Vice-Chair)
Representative Peter Barca
Representative Josh Zepnick
Representative Kim Hixson
Representative Phil Garthwaite

[Eric Pearson]

I am a Democrat of the Democratic Party, and I do not agree with our Democratic Party representatives in Washington.

Many of us are now ashamed to be Democrats. More than that, we have come to fear our own Democratic Party. Hatred and corruption - the roots of socialism - are on the march as they have never been before, and leading this march is our Democratic Party. Increasingly, mainstream Democrats are uncomfortable with what they are seeing in our party. All the more, we know it is dangerous.

We as Democrats are marching in a parade with people Harry Truman or even Jack Kennedy would not recognize - socialist (also know as progressives) who think that Western civilization began in 1969. Strangely, without meaning to, we the mainstream Democrats find ourselves representing this "socialist movement." However, for the "socialist" within our Democratic Party, there is nothing so strange about it. Socialist have always sought to leverage corruption for the sake of power.

Without doubt a large majority of our Democratic Party representatives in Washington are tainted by corruption, and the liberals among us are supporting the ideologies of progressives with their agendas based on moving our Nation deeper into a socialist form of government. This is a real threat to everything we hold sacred in America, and they are gaining evermore control over our Democratic Party, our Nation, and the American people.

As a result, our Democratic Party has already lost the equivalent of every member we have acquired over the past seven years or more, and many of them are now supporting the tea party. More importantly, a recent Newsweek cover declared, "We are all socialists now."

Meanwhile our middle-class families are looking for more than empty promises. They want to go back to work. And they want our Democratic Party representatives who run Washington to stop pursuing a big government, big spending agenda that includes a government takeover of health care, stimulus bills, a new national energy tax and taxpayer-funded bailouts.

In spite of everything our Democratic Party representatives in Washington will borrow $1.6 trillion this year, or about $15,000 for every household in the country. Over the next 10 years our federal government is expected to borrow an additional $8.5 trillion, and this is on top of the 12 trillion we currently owe. These figures are beyond being enormous, especially since we already pay one in seven dollars in interest.

Thank you, and God bless America

Eric Pearson, Democratic Party candidate for US Congress in the 5th district, Tennessee.

Site: http://www.democraticreformparty.com

[KG]

Patrick, you beat me to the punch. Here's a link to the amended bill.

http://www.legis.state.wi.us/2009/data/AB447-ASA1.pdf

[nonheroicvet]

Thanks to Patrick Fuchs for the info.

[R.J.]

Don't we have a scandal right here between a lawmaker and a lobbyist? Someone stake out the Motel-6 in DC.

[Henry Dubb]

It makes absolutely no sense to address interest rates of cash stores without reforming credit card laws. Don't get me wrong they are horrid businesses, but only exist because of usury laws. Currently, for similar types of borrowing, they are far cheaper than either credit and debit cards. Trust me, I went over my limit ($.23) for two days and it costed me over $100. The $39 fee is for every day its over the limit. Imagine if someone had to wait a week, two weeks, a month before going back into the black.

Until we get back to a constitutional form of government, in which banks are accountable to state and local government regulation, reforming cash stores is just a side show.

[Brian (neaguy)]

Pearson,
You have a weird site. George Washington wasn't a member of the Democratic Party, which of course, didn't exist at the time; and he didn't reflect Democratic Party values, for one thing being a slaveholder and for another advocating the killing off the original inhabitants.

You better rebuild your site with some accuracy about Democratic Party history.