Monday, August 15, 2011

Austin Joining Dallas in Regulating Payday Lenders!

I've hardly mentioned the fight against predatory lending led by CitySquare working with the Anti-Poverty Coalition.

As you may remember, in May, Dallas City Council unanimously passed a land use zoning ordinance restricting proximity of future short-term loan providers (including auto title lenders) to one another, how close they could be located next to residences, major roadways and requiring them to operate in free standing buildings. The ordinance also required short-term lenders to obtain a Special Use Permit from the city. The APC packed out the council and presented the council with 4000 signatures on petitions urging them to take action.

On June 22, the City Council took further action with a second zoning ordinance which addressed industry operations. This ordinance requires them to registration of the businesses, it requires documentation on their loans, there are limits to the number of times the loans can be rolled over and how much of the loan has to be applied to the principle of the loan, among other things.This ordinance also passed unanimously. These regulations give Dallas, what has been called the toughest ordinances in the country. And while the APC congratulates the entire council for its courage in protecting its citizens, we especially thank Councilman Jerry Allen for his dogged determination in leading the city council in doing the right thing.

Of course, as expected, the payday loan industry filed suit against the City of Dallas, in effect saying that the city was trying to 'put them out of business.'  It was not unexpected (which makes the council action even more courageous) the industry has been saying this about any attempts to put the brakes on making loans charging anywhere between 300%-900% - plus, interest on their loans, especially at the state level.  What is amazing to the point of being insulting, is the idea that this industry leaves so much carnage in its wake and then has the gall to portray itself as the victim! 'The mean old city of Dallas is trying to rob us of the opportunity to exploit the financial desperation of its citizens!'

We may be insulted, but fortunately Dallas doesn't stand alone in it's efforts to try and stop exploitation from masquerading as commerce. Now the City of Austin is trying to get into the act! 

"The lightly-regulated world of payday lending – high interest loans to working class citizens that often prompt unending cycles of debt – is soon to see some local regulation. City Council member Bill Spelman has posted two items on council’s August 18 draft agenda that locally regulate the lassiez-faire industry."

"The resolutions, posted to council’s draft agenda, tackle the issue on two fronts. One addresses land use and zoning for the businesses; as of this writing, back-up information isn’t posted, but according to a press release from Spelman’s office, it will “restrict new payday lending institutions from locating in certain neighborhoods, near major thoroughfares, or within close proximity to other payday lending institutions or residential areas.” Chris Riley and Mike Martinez are signed on as co-sponsors."
"The second resolution, as described, “will require payday lenders to register with the City of Austin, collect and maintain data on its operations, cap the maximum amount of a loan, and restrict the number of times a consumer can refinance a loan.” The posting description of the item also notes a $500 penalty for each offense. Mayor Pro Tem Sheryl Cole and Laura Morrison are names as co-sponsors on this item (so there’s five votes right there)..."
Sound familiar?! Those are the ordinances that the City of Dallas passed in May and June!

May saw the Texas state legislature pass admittedly relatively weak bills providing consumer disclosure and oversight of the industry. Dallas (and apparently Austin) recognized that while the bills were a step in the right direction they were not enough to protect its citizens. So Dallas took action - and now Austin is following suit.


As for putting predatory lenders out of business? Earlier this year, Daniel Feehan, CEO and President of Cash America International boldly proclaimed, "...more than 90 percent of our customers who are facing financial difficulties use short-term loans wisely." 

Even better, that means that regulation won't hurt them...or any other similar business really offering a needed service to consumers. Only lenders seeking to exploit desperate customers need worry. And no one should object to that - in Dallas or in Austin.

If you live in a city in Texas and you feel the same way, go to the Anti-Poverty Coalition Facebook page or CitySquare's Facebook page and leave us a message. We'd be glad to help you!

No comments: