LRB-0898/3
MDK:kjf:pg
2007 - 2008 LEGISLATURE
March 27, 2007 - Introduced by Representatives Nelson, Mason, Seidel, Van
Akkeren, Kessler, Pocan, Berceau, Travis, Boyle, Sheridan, Vruwink,
Sinicki, Pope-Roberts, Hebl, Smith, Hixson, Hraychuck and A. Williams,
cosponsored by Senators Hansen, A. Lasee and Carpenter. Referred to
Committee on Financial Institutions.
AB211,1,3
1An Act to renumber and amend 138.09 (1d);
to amend 138.09 (1m) (a); and
2to create 138.09 (1d) (b) and 138.09 (7m) of the statutes;
relating to: finance
3charges for licensed lenders.
Analysis by the Legislative Reference Bureau
Under current law, a lender other than a bank, savings bank, savings and loan
association, or credit union (financial institution) generally must obtain a license
from the Division of Banking in the Department of Financial Institutions (DFI) to
assess a finance charge for a consumer loan that is greater than 18 percent. This type
of lender is generally referred to as a "licensed lender." With certain limited
exceptions, current law provides no maximum finance charge for a consumer loan
made by a licensed lender.
The bill changes the licensing requirement so that it is based on the amount of
a loan, rather than the finance charge. Under the bill, a lender other than a financial
institution must obtain a license if the lender makes a consumer loan of $5,000 or
less.
The bill also prohibits a lender who is so licensed from assessing a finance
charge on a consumer loan that exceeds 36 percent per year. The bill also creates a
definition for "finance charge," which includes all cost elements associated with an
extension of credit, including fees, service charges, renewal charges, credit insurance
premiums, the cost of any ancillary product sold with an extension of credit, and any
other charge or premium. Under the bill, DFI enforces the foregoing prohibition. A
person who violates the prohibition is subject to the same penalty that applies under
current law to a licensed lender who does not obtain a license, which is a fine of not
more than $500, imprisonment for not more than six months, or both.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB211, s. 1
1Section
1. 138.09 (1d) of the statutes is renumbered 138.09 (1d) (intro.) and
2amended to read:
AB211,2,33
138.09
(1d) (intro.) In this section
, "division":
AB211,2,4
4(a) "Division" means the division of banking.
AB211, s. 2
5Section
2. 138.09 (1d) (b) of the statutes is created to read:
AB211,2,96
138.09
(1d) (b) "Finance charge" includes all cost elements associated with an
7extension of credit, including fees, service charges, renewal charges, credit insurance
8premiums, the cost of any ancillary product sold with an extension of credit, and any
9other charge or premium.
AB211, s. 3
10Section
3. 138.09 (1m) (a) of the statutes is amended to read:
AB211,3,211
138.09
(1m) (a) Before any person may do business under this section or charge
12the interest authorized by sub. (7) and before any creditor other than a bank, savings
13bank, savings and loan association or credit union may
assess a finance charge on 14make a consumer loan
in excess of
18% per year $5,000 or less, that person shall first
15obtain a license from the division. Applications for a license shall be in writing and
16upon forms provided for this purpose by the division. An applicant at the time of
17making an application shall pay to the division a nonrefundable $300 fee for
18investigating the application and a $500 annual license fee for the period
19terminating on the last day of the current calendar year. If the cost of the
20investigation exceeds $300, the applicant shall upon demand of the division pay to
1the division the amount by which the cost of the investigation exceeds the
2nonrefundable fee.
AB211, s. 4
3Section
4. 138.09 (7m) of the statutes is created to read:
AB211,3,54
138.09
(7m) No creditor who is licensed under sub. (1m) may assess a finance
5charge on a consumer loan that is more than 36 percent per year.
AB211,3,87
(1) This act takes effect on the first day of the 3rd month beginning after
8publication.
