Monday, May 16, 2011

The Business of Protecting Consumers from Business in Texas

The efforts of CitySquare, working with the Anti-Poverty Coalition, Texas Faith for Fair Lending, Appleseed and other allies, to regulate payday lending at the state level, have produced two pieces of legislation which have made it out of the House. HB 2392 which requires disclosures and information for consumers taking out short-term loans and HB2394 establishing licensing and oversight by the Office of Consumer Credit Commissioner. However, a vote on HB2393, which is designed to stop the cycle of debt through limitations on rollovers and loan size based upon a consumer’s ability to repay was postponed last week, which means it's pretty much dead. While all three bills are somewhat flawed, they only come close to being meaningful if all are passed. It is now up to the Texas Senate to present a bill strong enough to include both the most relevant features of legislation in the House while addressing the need to stop the usurious practices of this industry.

Meanwhile, it's interesting to not the difference in the way reporters in state write about legislator's efforts to regulate predatory lenders. The first is from the Texas Observer the next, published in the Fort Worth Star-Telegram

The Mighty Payday Industry Roars

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Published on: Thursday, May 12, 2011

At the beginning of the legislative session in February, I posed a couple of questions in my blog. Will the payday industry play ball with Senator Wendy Davis and other legislators who want to protect consumers from bad actors? Or will they drag their feet, hire more lobbyists and torpedo reform once again – as they do every session -- so they can continue to suck every last drop out of Texas’ citizens.
Well, we now know the answers: No & Yes.
Republican Rep. Vicky Truitt offered a trio of payday lending reform bills in the House Thursday. “This is the wild wild West right now, and all we are asking for is a few good fences to reign in the bad actors,” Truitt told the House chamber.
Truitt’s bills could barely be called reform. Still, House Bill 2594 which would require payday lenders to license their storefront operations, only passed after a long contentious battle in the chamber Thursday with Republican Rep. Gary Elkins, who owns a chain of payday lenders, and Rep. Jodie Laubenberg, another Republican,  who offered numerous points of order to try and kill the bill.
In his zeal to kill the bill to help his own chain of stores, Elkins set a new low for conflict of interest in the Texas Legislature.
HB 2592, which hardly does anything other than require that payday lenders provide more disclosures about loan fees passed Wednesday night. The so called “controversial” piece HB 2593, which actually tries to limit the amount and number of loans consumers can take out – in order to prevent a debt trap -- was hung up on a point of order Thursday evening and may not pass before the House chamber’s midnight deadline to pass House bills.
In the Senate, Wendy Davis’ payday reform bill, which is much more effective than Truitt’s weak sauce, can’t muster the 21 votes to be brought up for debate in the Senate.
At the beginning of the session, the payday industry already had 35 lobbyists on its payroll. Judging from the results of this week – the payday industry got what they paid for. The question now is what do Texas consumers have to do to have their voices heard?

Toughened limits on payday lender win preliminary approval in Texas House

AUSTIN -- The Texas House gave preliminary approval Thursday to legislation designed to toughen controls on payday lenders. Meanwhile, scores of other bills hung in the balance as the critical midnight deadline approached.

House members seemingly put aside the partisan discord from the past several days to churn out bill after bill in the hopes of beating the cutoff for first-time floor consideration of House bills.
Bills that didn't make the cut were headed for the trash heap. One key bill awaiting action in the final crunch was legislation that would give school administrators more flexibility to lay off personnel and adjust salaries.
The Republican-controlled House approved the payday lending bill after a testy exchange between Rep. Vicki Truitt, R-Keller, the bill's sponsor, and Rep. Gary Elkins, R-Houston, a payday lender who opposed it.
Truitt, who chairs the House Pensions, Investments and Financial Services Committee, accused Elkins of a conflict of interest and "blatantly" using his elective office to protect his business interests.
"This is not about my business," Elkins responded, declaring that Truitt's bill "is nothing more than an expansion of government to try to solve a problem that just doesn't exist."
Truitt also drew opposition from former House Speaker Tom Craddick, R-Midland, who sponsored a more restrictive measure to regulate the industry. Craddick, who rarely engages in lengthy debates, said Truitt's bill "is wrong -- it doesn't fix anything."
The bill, HB2594, was one of three bills Truitt crafted in what she called an effort to weed out abuses by "bad actors" without forcing businesses to leave the state.
HB2594 would license so-called credit access businesses with the Consumer Credit Commissioner. It would also set licensing fees and bonding requirements and allow the credit commissioner to revoke licenses for violating the requirements.
HB2593, which got hung up on an opposition point of order, would limit the number of loan renewals by payday lenders. HB2592, which has passed the House, toughens requirements for customer disclosures.
Truitt said she felt obligated to engage in the issue because of her position as committee chairman, saying her legislative package emerged from hours of negotiations between businesses and consumer groups.
Consumers who have testified in legislative hearings said interests and fees on the short-term payday and car title loans subjected them to a deepening cycle of debt.
"The horror stories that are happening to Texas consumers continue to grow and continue to mount," Truitt said.

The two perspectives make clear one thing: protecting consumers from big business is tough business in Texas...

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