Racine, Wis., Issues Payday Loan Moratorium
By Paul RizzoPayday Loan Writer
The city council in Racine, Wisconsin, voted unanimously to create a 90-day moratorium on new payday loan businesses in the city, reports the Journal Times.
The temporary ban will be in place for the next three months to give the city time to draft new ordinances that establish where Wisconsin payday loan firms can operate. Aron Wisneski and Greg Helding have taken the lead for the council on the issue.
Wisneski grew concerned after learning that payday advance loan businesses charge its customers as much as 800 percent interest on a $300 loan. Citing West Racine as an example, Wisneski added he was concerned the businesses were descending on the city too quickly.
While the city can't ban the businesses, which are legitimate, it can use zoning laws to restrict where they operate. Milwaukee, Madison and many other cities across the country have created guidelines for where payday loans and similar businesses can operate.
The proposed Racine ordinance would require payday advance agencies to operate a certain distance apart from each other, and would ban them a certain distance from residential neighborhoods.
"We're saying you can be in our city, but we want to set some guidelines and restrictions on where you operate," Wisneski said.
City officials are concerned that the increased number of check-cashing businesses and payday advance loan stores target the area's economically disadvantaged neighborhoods.
According to a proposed resolution, city officials believe the location of payday loan stores in certain lower-income areas causes financial problems for the residents of those communities. Due to the speed of the payday cash loans issued and the amount of money exchanged, officials think the stores are attractive to criminals who may commit crimes.
The City Council voted 14-0 in favor of the 90-day moratorium.
