Texas Tribune: Fight Over Payday Loans, From Capitol to Campaign Trail
January 15, 2014
The payday lending controversy that exploded in the governor’s race in recent weeks highlights the state’s lack of regulation and the challenge that lawmakers have faced with an issue that has been as contentious at the Capitol as it is on the campaign trail.
Last year, a major legislative effort to impose state regulations on lenders failed, and since then, Houston has joined Austin, Dallas, El Paso and San Antonio in passing a city ordinance to limit the loans. Now, the issue of so-called predatory lending is flaring in the gubernatorial race amid calls for the resignation of Gov. Rick Perry‘s appointed head of the governing board of the agency charged with regulating the credit industry and educating consumers, who is also an executive for one of the lenders.
In Texas, where payday and auto-title lending is a $4-billion-a-year industry with some 3,500 businesses, there are no limits on fees or loan sizes. Supporters of the industry say lenders offer a needed service to consumers who have few options for short-term loans. Critics say the businesses prey on struggling Texans by charging high fees and trapping borrowers in a cycle of debt.
“You’ve got these people doing stuff in Texas that they wouldn’t dream of doing anywhere else in the country,” said state Sen. Rodney Ellis, D-Houston. “It is truly the wild, wild west.”
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