Wisconsin may no longer be the only state with no regulations on the payday loan industry if a bill passed by the state Senate Tuesday makes its way to Gov. Jim Doyle‘s office for his final approval.

The bill would put regulations on the payday loan industry in the state, and is similar to a bill passed by the Assembly in February.

Payday loans are small, unsecured, short-term loans that borrowers repay from their next paycheck. Such lenders often charge extremely high interest rates, and sometimes loans take borrowers more than one paycheck to pay back. This leaves some in a cycle of debt.

Wisconsin is the only state that currently does not have regulations on the industry, causing many senators to characterize the state’s current loaning industry as “the wild, wild west.”

The Senate bill will limit payday loans to $1,500 and would prevent lenders from rolling loans over more than once. The bill would also not allow payday loan facilities to be within 150 feet of residential areas or 1,500 feet of other such establishments.

Tuesday’s debate mostly revolved around whether to pass an amendment that would regulate the industry even more stringently than previously proposed, instituting a cap on interest rates at 36 percent.

Debate was uniquely divided, as party allegiances seemed to have little effect on legislators’ support of the amendment.

Those who spoke against the amendment included Sen. Lena Taylor, D-Milwaukee; Sen. Dave Hansen, D-Green Bay; and bill author, Sen. Jim Sullivan, D-Wauwatosa.

Hansen and many others expressed fear that if the amendment were adopted, the Senate and Assembly would not be able to reach a consensus, leaving the state without any regulation in the industry. The Assembly also failed to pass a similar amendment to cap interest rates.

“There is no doubt in my mind that something must be done to protect the consumers in this type of lending,” Hansen said.

Taylor said while some of these loans may be exploitative, they do not want to eliminate the industry entirely, as they allow lower income citizens access to capital.

Among those who spoke in favor of the amendment were Sen. Glenn Grothman, R-West Bend; Sen. Michael Ellis, R-Neenah; and Sen. Judy Robson, D-Beloit.

Many, including Ellis, expressed the opinion the state should crack down on these industries for exploiting lower income individuals and keeping them in debt.

“This is a straightjacket to keep them in poverty indefinitely,” Ellis said.

In Ellis’ opinion, Wisconsin citizens got by without such businesses before and they certainly are not a necessity for lower income people.

“It makes them serfs; it makes them almost slaves to the payday loan industry,” Ellis said.

In the view of Robson, when you look at the organizations that support the amendment, it is those who truly have the interest of the poor at heart.

“We look at the groups who are supporting the caps, and it’s the people who are in the trenches,” said Robson

Wisconsin Democracy Campaign Executive Director Mike McCabe also called for regulation in an industry he characterized as “legalized loan sharking.”

Though the amendment failed to pass, senators ultimately voted 21-12 for passage of the bill.