Payday Lenders Shell Out Record Cash To Kill Regulation

State is one of few to allow loan sharks’ high interest rate

September 9, 2009

Madison - Payday lenders contributed a record $140,200 to the governor and legislative candidates in 2008 when it looked like Democrats, who favor capping the industry’s controversial loan rates, would capture full control of the legislature, a Wisconsin Democracy Campaign review shows.

The previous high annual campaign contributions from the payday lending industry, which includes check cashing, title loan and other cash advance outfits, was $59,800 in 2002 and $54,205 in 2006 (see Bar Chart).

In addition to last year’s record contributions, payday lenders have already doled out $28,570 in the first six months of 2009, including $19,900 to legislative Democrats to smother support for bills introduced by Assembly Democrats to limit payday lender interest rates to 24 percent annually and 36 percent a year – a far cry from the industry’s typical annual interest rate of 525 percent.

A third proposal more acceptable to payday lenders would regulate the industry in lieu of capping interest rates and limit the number of times a customer can roll over their original loan.

The bill to limit interest rates to 36 percent has substantial legislative support – 43 of the 99 members of the Assembly which is controlled 52-46-1 by Democrats are sponsors of it, and 15 of the 33 members of the Senate which is controlled 18-15 by Democrats are sponsors of it.

But since the late 1990s at least eight legislative proposals to reduce fees or cut interest rates failed to reach the floor in the Senate or Assembly. And this year, the industry is projected to spend as much as $500,000 on more than two dozen lobbyists to pressure legislators to oppose interest rate caps.

Payday lenders are pouring a lot of money into campaign contributions and lobbying here because Wisconsin is one of the few states in the country that doesn’t regulate the industry. That’s the reason payday lending grew in Wisconsin from 17 outlets in 1996 to 542 shops in 2008 when they made $732 million in loans, according to two state agencies.

Fifty-four legislative candidates and committees received $1,000 or more in payday lender contributions in the 2008 election year (Table 1). Topping the list were three Democratic Senate candidates – two of whom were in close races for open seats. Twelfth District candidate Jim Holperin got $10,500 and defeated Republican candidate Tom Tiffany, who got $4,000 from payday lenders, for that open seat. Holperin was followed by 18th District candidate Jessica King, who got $10,000, and was defeated by Republican Randy Hopper, who accepted $2,000 from payday lenders. Eighth District Democratic challenger Sheldon Wasserman accepted $8,000 from payday lenders. He was defeated by incumbent Republican Alberta Darling who did not receive payday lender contributions in 2008.

Most of the payday lenders that do business in Wisconsin are from outside the state – Ohio, Illinois, Tennessee, Florida, Georgia and Texas. Payday lenders led in special interest contributions from outside Wisconsin in 2008 as they have in many previous years. In 2008, $106,700 of the $140,200 they gave to Wisconsin politicians came from payday lenders outside of the state. So far in 2009, $24,570 of the $28,570 in payday lender contributions has come from outside Wisconsin.

Owners of four payday lender chains each gave $10,000 or more to Wisconsin candidates last year (Table 2). Topping the list was Rod and Leslie Aycox of Alpharetta, Georgia, owners of LoanMax, who each contributed $10,000. Robert and Lynne Wolfberg of Glencoe, Illinois, contributed $17,500 and Robert’s brother Daniel and his wife, Linnette, of Winnetka, Illinois, contributed $11,500. Campaign finance records showed Robert and Daniel Wolfberg, who own PLS Financial Services and its chain of more than 300 PL$ Check Cashers stores, both exceeded the $10,000 annual limit on total individual contributions to Wisconsin state and local candidates. Robert Wolfberg contributed $15,775 and Daniel Wolfberg contributed $10,500.

Kevin Dabney of Waukesha, owner of Speedy Loan, also exceeded the $10,000 annual limit on total individual contributions to Wisconsin candidates, giving a total of $14,000 in 2008. Dabney was followed by Harold and Trevor Ahlberg of Irving, Texas, owners of the Cash Store, who each made $10,000 in contributions in 2008.

The top payday lender industry contributors in the first six months of 2009 include Allan Jones of Cleveland, Tennessee with Check Into Cash who contributed $7,920; Robert and Daniel Wolfberg who have contributed $5,275 each; Paul Hoffer of Wausau with Xpress Cash Management who gave $3,750; and Robert Reich of Deerfield Beach, Florida with Wisconsin Auto Title Loans who has given $3,000.

Tables
Recipients • Givers

Table 1
2008 Contributions To Wisconsin Candidates For Statewide Office
And The Legislature From Payday Lending Interests

Table 2
2008 Contributions By The Payday Lending Industry
To Wisconsin Candidates For Statewide Office And The Legislature