An assembly of Wisconsin Democrats have announced a compromise on legislation regulating the payday loan industry in that state.

The compromise bill would remove the interest rate cap on payday loans, which industry experts say would make it impossible to loan money in the state.  The new bill instead limits loans to $600 or 35% of the consumers income including interest, whichever is lower.

Representative Gordon Hintz says the new provisions will protect borrowers by making the loans tailored to the borrowers ability to pay the loan back.

Kept from the original bill is a statewide database that would track consumers who receive payday loans, preventing them from taking out more then one loan at a time and a transaction fee placed on lenders used to fund financial literacy programs.

Representative Hintz admits the new bill will still make it difficult for the lenders to operate in the state.  He says the regulation will promote a new business model rather than push to keep the older outdated model.  The new bill will also ban the practice of using an auto title as collateral on the loan.  One state representative says that the practice of title loans sets borrowers up for failure, since they can loose their transportation which has a very large effect on their earning potential.

There is hope that the bill will be voted on in the coming weeks and be on the Governor’s desk by the end of the sessions.  They do admit that the bill is likely to be changed again before it finally passes.