Thursday, February 13, 2014

Texas' 13th City Passes Dallas' Payday Loan Ordinance...See the Alternative for Yourselves!

Tuesday, my column in the Dallas Morning News dealt with the U.S. Postal Service's proposal that they serve the underserved and underbanked populations of our country by providing some financial services - including payday loans. It's an incredibly interesting proposal and has even peaked the interest of Senator Elizabeth Warren.

Tuesday I learned that Bryan, Texas City Council has become the 13th city, including Houston, to adopt Dallas' payday lending ordinance. Read their ordinance here. Congratulations!

"The council also passed the second reading of payday lender regulations, in which the city will cap payday loans at 20 percent of a borrower's gross monthly income. It also caps auto title loans at 3 percent of a borrower's gross yearly income, or 70 percent of the retail value of the vehicle."

"The ordinance will regulate credit access businesses -- or ones that assist a consumer in obtaining a consumer credit extension by deferred transaction -- to protect residents from terms and fees associated with predatory lending practices. It will require credit access businesses to apply for a certificate of registration from the city and keep records of all loans made for at least three years, which will be available for city inspection."
"Repayment loans -- or those that are paid in installations -- cannot be made payable in more than four installments, and each must be used to repay at least a quarter of the principal amount for the loan."
"One person spoke against the ordinance, saying the language needed to be tightened to avoid confusion. Another said the $500 fine for offenses is not high enough."
"The ordinance is set to take effect Aug. 1."

In the press release announcing the adoption of the new law, city officials said....""Families who fall victim to these types of loans are usually experiencing a crisis situation," said Alsie Bond, City of Bryan community development manager. "The loan is to meet a gap in finances, but the loans themselves cause additional stress and are often impossible to repay. It creates a ripple effect throughout our community. This ordinance is about regulating the credit access businesses so that families in Bryan can meet short term needs without the additional financial hardship.""

"Austin, Dallas and Houston have passed similar ordinances to regulate credit access businesses. The City of Bryan looked to these cities, as well as others, to model similar regulations for credit access businesses in Bryan."

"Under the new ordinance, credit access businesses must be licensed and certified by the City of Bryan. These businesses will also be required to post notices about fees and collect and maintain data on its operations. The ordinance will allow the City to regulate the maximum amount of a loan and restrict the number of times a consumer can refinance a loan."

"The City of Bryan community development department, among others, will partner with local financial groups to improve financial literacy and independence for Bryan families through outreach programs."
Two days before my column ran, this story about the USPS proposal ran in the Brownsville paper...
With all of the attention, I thought you might want to read the Postal Service's proposal for yourselves...

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