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GOP and Limits on Payday Lenders, Auto Title Loans
May 14th, 2011
Last year the Democrats passed a bill that limits payday loans to a maximum of $1,500. Now Democratic Gov. Jim Doyle, by using his limited powers of veto to ban loans secured by vehicle titles, has added additional restrictions to the bill
Loan limits
The 2010 law limits loans to $1,500 or 35% of monthly income, whichever is the lesser. Once the loan comes due, no additional interest may be charged. Republicans on the Joint Finance Committee voted to change that so payday lenders could charge 33% a year on loans that had fallen due.
Wisconsin
Loans secured with auto titles would again be legal in Wisconsin under a proposal adopted Thursday by the Legislature’s budget committee. This also rolls back other restrictions on payday loans. Until the Legislature acted last year, Wisconsin was the only state that did not regulate payday and auto title loans.
The Joint Finance Committee
The Joint Finance Committee voted without debate 11-5 to add the proposal to the state budget, with all Republicans except Sen. Glenn Grothman (R-West Bend) voting for the proposal and all Democrats voting against it. The committee’s action would end that ban on auto title loans. Senate President Mike Ellis (R-Neenah), who has been pushing for tighter regulations on payday loans, said, “I am surprised by the committee’s action.”
Thieves?
“The biggest legal thieves we’ve got in Wisconsin are payday lenders,” Ellis said. “The measure should be debated on its merits. We fought for years to keep extraneous policy out of the budget. Apparently that only works when it chooses to satisfy the people writing it.”
Payday and title loans.
Rep. Robin Vos (R-Rochester), the committee’s co-chairman, offered the motion on payday and title loans. He said the changes would largely bring back the original bill as passed by the Legislature last year before it was reshaped by Doyle’s vetoes. “You can make a case that it was done wrongly the first time. We’re correcting his error and actually writing in some better provisions,” Vos said. Grothman, a longtime critic of the payday loan industry and the lone Republican to vote against the measure in committee, declined to comment on his vote. He said he didn’t know enough about the changes.
Annualized interest
Payday loans are typically offered and taken for two to four weeks and have annualized interest rates of 500% or more. The industry is large and fought the 2010 legislation hard, spending $669,000 on lobbying that year. In 2009, there were 527 short-term lender locations in the state, and state records show that they lent $600 million.
The bill
Under the bill Doyle signed a year ago, lenders cannot issue loans secured with vehicles. At the time, Doyle said he considered such loans predatory because low-income people risked losing their cars if they couldn’t pay off their loans, which in turn made it more difficult for them to get to work.
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