April 19, 2013
There’s a very controversial bill before the Senate right now over the issue of payday lending.
Frankly, it’s appropriate that it’s controversial. This has been a tough issue for a while now. But we need better regulation of the payday lending. A lot of us who’ve worked together and stood together on the payday lending issue — and on many other issues – have very different feelings about this bill.
Strong progressive groups such as Texas Impact and the Center for Public Policy Priorities – both of which have done as much good on this issue as anyone in the Capitol – support the bill. And with amendments that many of us continue to push for, the bill will provide even more protections for Texans.
Fundamentally, like these important consumer advocates, I want to make sure there’s some protection for 330,000 Texas borrowers who, without this bill, will be left to do business with payday lenders without any state protections and potentially unenforceable local ordinances.
I want to stop the proliferation of dangerous and rapidly mutating hybrid loan projects. This bill defines and limits those loan products; local ordinances don’t.
I want to bring order to mobile and internet loan transactions, which only the state can do effectively.
I want to protect Texans from a number of expenses they’re currently exposed to; by setting loan amounts based on a borrower’s ability to repay them; by limiting the number of refinancing options; by requiring that lenders offer extended payment plans without additional fees for folks who have trouble repaying loans on time; and by limiting loan terms to no more than one year. The Texas Office of Consumer Credit has estimated that at in 2012, at least $131 million would have been saved by consumers based on the proposed refinance limitations alone.
Is the proposed legislation perfect? No. And people can make some compelling arguments for why it isn’t.
But I believe we need more protections now. And it’s much, much better than nothing. Without it, nothing may be all we’re left with.
Right now, there is nothing to protect nearly every Texan living outside of Austin, Dallas, El Paso or San Antonio. And if those city ordinances can’t survive a court challenge – and a great many of us fear they won’t – then nothing is all that any Texan will be left with.
That’s not a risk I’m willing to take.