Payday Lender Cash Derails Tough Regulation
Campaign contributions and $669,000 worth of lobbying idle legislation
March 1, 2010
Madison - An Assembly fundraising committee used to tap powerful special interests for campaign cash accepted nearly $14,000 in the last half of 2009 from payday lenders and some of their lobbyists as legislation stalled to limit the industry’s high lending rates, a Wisconsin Democracy Campaign review of campaign finance reports filed by the four leadership-controlled campaign committees shows.
Today, the bill, which would have capped payday loan interest rates at 36 percent, is all but dead even though nearly half the legislature – 58 Democrats and Republicans including the Assembly majority leader and both chairmen of the powerful Joint Finance Committee – sponsored it last summer.
In addition to campaign contributions, 16 groups reported spending 2,466 hours and about $669,000 in 2009 to lobby legislators on the interest cap bill and four other legislative proposals to regulate payday lenders or auto title loan outfits. Seven of those organizations, which are payday lenders, their trade group and an auto title loan company, spent $583,658 to lobby one or more of the bills.
Campaign finance records show the Assembly Democratic Campaign Committee accepted $13,900 from payday lenders and auto title loan company lobbyists in the final six months of 2009.
Two weeks after the bill was introduced Democratic Assembly Speaker Michael Sheridan of Janesville said in a September 10 interview the proposal’s 36 percent rate cap went too far even though he co-sponsored a bill in 2007 with a 36 percent rate cap.
Campaign records show the committee which Sheridan controls accepted the bulk of the payday lender contributions September 9 and October 2. Cottonwood Financial executive Trevor Ahlberg of Irving, Texas, and the company’s Madison lobbyist, Bryan Brooks, contributed $3,000 and $2,500, respectively, on September 9. Two $2,500 contributions by executives of Check N Go of Cincinnati, Ohio were made October 2.
Overall, the four legislative campaign committees accepted $28,350 in campaign contributions from payday lenders and their lobbyists in the last six months of 2009.
The Republican Assembly Campaign Committee accepted a $3,000 contribution December 17 from a political action committee controlled by Advance America Cash Advance of Spartanburg, South Carolina.
Historically, most legislative Republicans have opposed regulating the payday lender industry particularly by capping loan interest rates, and most Democrats support regulating the industry with many of them favoring interest rate limits.
But even though Democrats control the Assembly 52-46-1, legislative action languished on the rate-cap bill and even other less stringent measures and contributions flowed to the Assembly Democrats’ legislative campaign committee until early this year when it surfaced Sheridan was dating a payday lobbyist. Shortly after the revelation, Democrats released a compromise payday loan regulation bill, but without a loan rate cap. The bill was approved 59-38 and sent to the Senate but majority Democrats there plan on considering their own bill introduced February 9 that includes a 33 percent cap on interest rates but only after borrowers fail to repay their loans on time.
It is not known when Democrats who control the Senate 18-15 will consider a payday lending regulation bill. The legislature is scheduled to adjourn for the year in May. But until now, a bill to limit payday lending rates had not been introduced in the Senate even though the Assembly bill to cap loan rates was sponsored by 15 of the 33 state senators – 12 Democrats and three Republicans. If the Assembly and Senate pass different bills representatives would have to craft a compromise and get it passed by both houses and sent to the governor before the legislative session ends.
The Senate’s two legislative leadership committees accepted a combined $11,450 from payday lenders and their lobbyists in the last half of 2009.
The Committee to Elect a Republican Senate accepted $7,600 from payday lenders and their lobbyists in the last half of 2009, including $4,000 from Harold Ahlberg, retired president of Cottonwood Financial; $1,500 from Allan Jones, founder and chairman of Check Into Cash of Cleveland, Tennessee – the nation’s third largest payday lender; and $1,500 from Advance America Cash Advance PAC.
The State Senate Democratic Committee accepted $3,850 from payday lenders and their lobbyists in the last six months of 2009, including $3,000 from Trevor Ahlberg in December.
Wisconsin remains the only state that does not have a rate cap on payday loans so the interest can amount to more than 500 percent a year. That has fueled a rapid expansion of payday loan stores – from two in 1995 to 542 in 2008.