Wisconsin restricts payday lenders

May 25 2010 - 11:50pm

MADISON, Wis. -- Gov. Jim Doyle single-handedly banned auto title loans in Wisconsin on Tuesday.

The governor signed a bill that will regulate payday lending for the first time after years of unchecked growth by the industry. But he creatively used his partial veto power to rewrite the law, banning auto title loans and making other changes to protect consumers from what he called "predatory lending practices."

Lawmakers approved the plan last month, but decided not to ban the short-term loans that are secured by a car title after key senators objected in the final weeks of the session. Instead, the bill that cleared the Senate and Assembly called for limiting auto title loans to one per customer for no more than 50 percent of the car's value, excluding fees.

Doyle vetoed sections of the bill to prohibit licensed lenders from issuing auto title loans when the law goes into effect Dec. 1. In a veto message, he called them "an example of some of the worst predatory lending practices."

"Auto title loans can result in individuals losing their vehicles due to failure to make timely payments on relatively small loan amounts, putting at high risk an asset that is essential to the well-being of working families," the governor said.

Doyle aides said they did not know how many lenders would be put out of business in coming months.

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