Understanding Convenience Lending in Wisconsin
Statewide Dialogues on Convenience Lending
During 2008-2009, WIPPS helped to coordinate and facilitate a series of public dialogues in five locations around the state (Wausau, LaCrosse, Fox Cities, Milwaukee, and Madison) on the issue of consumer credit, lending sources, and debt. This work was part of a statewide convenience lending project involving Get $mart Coalition of Wausau, US Bank, River Valley Bank, Abby Bank, UW-Extension offices in Marathon County and Milwaukee/Racine Counties, Asset Builders of America, Inc., The League of Women Voters, Catholic Charities, The Wausau Daily Herald, the Appleton Post-Crescent, representatives of the Federal Reserve Bank in Chicago, and several UW Colleges faculty members.
In the current absence of federal legislation, marketplace responses and a patchwork of state and municipal regulations drive industry and consumer behavior regarding convenience loan practices. Little research has been done on the situation, and the evidence that does exist is inconclusive. States that have banned payday loans have noticed mixed results, and Wisconsin has done little to investigate the issue, leaving it at a policy crossroads with regard to the convenience loan phenomenon. This project proposed a deliberate pathway to redress this situation, by accessing research and public feedback and by leveraging the respective strengths of each partner.
Phase one of this project investigated the background of the industry and practices nationally and in Wisconsin through field surveys of convenience lending customers and interviews with industry owners and managers, resulting in a report to the public, press, industry professionals, service-providers, and government leaders. The second phase of the project consisted of a series of statewide public dialogues (using the NIF/Kettering model) on the issues of consumer credit, debt, and lending practices and their impact on local communities, plus a report-out on these dialogues. The third phase of the project consisted of a special convenience lending track as part of the August 6-7, 2009 “Understanding and Overcoming Poverty in Wisconsin” Conference in Wausau.
The overarching goal of the project was to provide Wisconsin legislators, municipal leaders, finance industry stakeholders, service agencies, non-profits, and the general public with information and research that allowed for informed public dialogue, sound policymaking, and effective provision of services to the citizens of Wisconsin with regard to short-term consumer lending. Important secondary objectives of the project included:
- providing selected UW Colleges students with an opportunity to conduct secondary research as well as hands-on fieldwork in support of a statewide project with potential to significantly impact public policy
- creating avenues for public input using a sound and tested model (the Kettering Foundation/NIF deliberative dialogue model) on a critical issue of importance to the state of Wisconsin and corresponding online community forums via respected media outlets
- facilitating the first ever statewide financial industry conference and workshop venue to discuss an issue of concern for a variety of stakeholders and to share knowledge and best practices.
A major outcome for this project would be the standing-up of a state-wide network to define industry standards and practices into the future and provide a framework for supporting products and events that have a long lasting impact on Wisconsin communities.