Monday, February 7, 2011
Dallas Morning News Supports Efforts to Close Loophole in Texas State Law
"...getting all payday leaders to play by the rules is proving as elusive as corralling a greased pig. Payday lenders began registering and calling themselves “credit service organizations” — a clever designation in Texas law that allows them to skirt the state’s 10 percent cap on interest rates and sock unsuspecting borrowers with endless fees that drive up the real cost of the loan to an annual percentage rate of more than 400 percent.
Lawmakers need to end this charade now because it is costing hard-working Texans millions of dollars and is pushing people already on precarious financial ground into financial quicksand. A modest $300 loan that a distressed borrower thought might cost $20 or so in interest could end up costing hundreds if the original debt isn’t quickly repaid and, thus, another two-week loan is needed. That often happens because trying to repay the first loan gobbles up much of the next check. And this is helping people make ends meet?
"This session, former House Speaker Tom Craddick , R-Midland, and state Sen. Wendy Davis, D-Fort Worth, have filed bills, HB 410 and SB 253, respectively, to bring payday lenders back under state oversight as finance companies, a sensible reform that the House and Senate should back."
"Davis and Craddick, who no one would confuse as ideological and political soul mates, have support in this quest. Dallas and several other Texas cities — along with many churches and nonprofits — are looking to the Legislature to help end these abusive practices that they see destroying communities."
"Payday lenders used to mostly target low-income borrowers. Now they also are snaring financially strapped middle-income, senior citizen and military families."
Here's the full editorial.
Let your state senator and representatives know that you support this legislation. You can contact State Representative Tom Craddick (email: email@example.com; phone: 512-463-0500), or State Senator Wendy Davis (phone: 512-463-0110) and let them know it's time for us to bring an end to exploitation masquerading as business!