Houston Chronicle: Time to dump payday loan exec as watchdog
January 1, 2014
January 1, 2014
Think fast. A bit of Texas trivia for you this fine holiday morning – Who oversees the state’s top watchdog over Cash America and other predatory payday lenders across the state?
If you answered “a qualified, fair-minded individual free of industry entanglements and conflicts of interest” you would be … wrong!
Maybe you’re even a native. You know how the game is played. You know the fix is in – for the foxes, not the hens. And you don’t expect any better from our public officials, especially ones such as Gov. Rick Perry, who has collected more than $35,000 in campaign contributions from Cash America’s political action committee alone, according to state records.
Few batted an eye when Perry appointed William J. White in 2009 chairman of the Finance Commission of Texas – even though the agency oversees the consumer credit office charged with protecting consumers.
It’s regulation, Texas-style. Truth is, though, on payday loans, there is no meaningful regulation in this state. The industry lobby has defeated legislative reform efforts again and again. And when cities began stepping forward, as Houston finally did last month, to implement local consumer protections, one person was quick to protest. That’s right: White, the guy charged with protecting consumers.
In April 2012, he signed the commission’s resolution complaining of the “complexity” and “confusion” of local payday regulations. He asked the Legislature “to more clearly articulate its intent for uniform laws and rules to govern credit access businesses in Texas.”
In other words, he asked lawmakers to bigfoot (or, pre-empt) local protections, forcing cities to conform to the state’s do-nothing regulation.
It didn’t happen. But it did hint at White’s true allegiances. Then, a few days ago, he all but confirmed them in an interview with the El Paso Times.
White sees no conflict
White defended the practices of his employer, Fort Worth-based Cash America International Inc., which a federal agency ordered in November to pay $19 million in fines and refunds following allegations of abusive lending practices.
The U.S. Consumer Financial Protection Bureau accused Cash America – one of the nation’s largest short-term lenders – of “robo-signing” court documents and illegally overcharging military service members and their families, then destroying records before the bureau’s investigation.
White also suggested to the Times reporter that it’s out of line to even question the industry. He maintained that the spiral of indebtedness in which many consumers find themselves after taking out short-term loans is the fault of the consumer, not the lenders charging high interest rates and fees.
“There’s nobody out there that forces anybody to take any kind of loan. People are responsible for their decisions … ,” White told the Times reporter. “When I make a wrong decision, I pay the consequences.”
There’s nobody out there who makes you buy gas after a hurricane, either, or book a hotel room because your flood-prone house flooded. Yet the state, through Texas Attorney General Greg Abbott, still protects people against price gouging and profiteering on misery after such an event. I guess the misery of the working poor is another matter.
Blames the consumer
Personal responsibility is important, but White seems to think companies bear no responsibility for practices designed to ensnare desperate consumers with loan terms that set them up to fail. He blames the plight of debt-drowned consumers on imprudent spending decisions, not 1000 percent interest. He cuts them no slack for a lost job or unforeseen medical bills or for ends that, for whatever reason, just don’t meet.
“You have to look at the individual circumstances as to what put them in that position,” White told the newspaper. “Are they paying for a 60-inch TV?”
In Tiffany Richardson’s case, it wasn’t a TV that led her to take out an auto title loan. It was her mother’s cancer. The registered nurse, who lives in southwest Houston, had to stop working to take care of her mother, yet she had thousands of dollars in medical bills and prescriptions to pay. The loan company’s terms and policies were so impossible, Richardson told me, that she ended up having to take out another auto title loan on her sick mother’s car. Now she fears losing both.
“This thing is more lucrative than drug selling, and it’s on the backs of people who are already down,” Richardson told me. She doesn’t want short-term loan companies shut down, she said; she just wants them to “have fair practices.”
“Like, one, who doesn’t take, in modern society, a payment over the phone? And who doesn’t take a partial payment when people are trying to rebuild? We’re coming out of a recession. So every little bit helps. If I’m trying to be diligent and pay what I can, you should take that and not penalize me for it so you can add more fees. That’s greed.”
Earlier this week, Democratic gubernatorial candidate and state Sen. Wendy Davis, of Fort Worth, declared White’s comments a “blatant conflict of interest,” and called on Perry to remove White from the state post.
Perry – no surprises here – isn’t budging. And what from Abbott, the Republican candidate hoping to succeed Perry? As of deadline Tuesday, silence.
The attorney general’s spokesman didn’t respond to a phone message or to a list of questions asking, among other things, whether he would have appointed a payday loan executive to watch over the payday loan industry. Abbott himself has taken more than $21,000 from Cash America’s PAC, according to campaign finance records. He also has promised a fresh perspective and transparency in government.
Here’s a chance to prove it. Abbott should follow Davis’ lead and call for White’s ouster, condemn the commissioner’s comments and show he’s prepared to lead differently, to cast aside old ways, and to replace cronies with competent, fair appointees.
If the new year is really about making fresh starts and resolving to do better, we need candidates who are prepared to do just that.