Senate Committee Targets Payday Lending

[sonias]

Texas Tribune 2/22/11
Senate Committee Targets Payday Lending

For Cynthia Reynosa, a $500 payday loan meant she could help her mother, suffering from rheumatoid arthritis, pay her high insurance deductible. But the interest she paid over the next six months totaled $1,200 — more than twice what she'd borrowed.

"I was thinking I would find the money wherever I would have to find it, so she wouldn't have to suffer anymore," Reynosa testified during a Senate committee hearing today.

If a set of bills filed by Sens. Wendy Davis, D-Fort Worth, and Royce West, D-Dallas, passes this session, consumers like Reynosa who take out short-term, high-interest loans could be protected. Their measures would close a loophole in the state finance code, placing a cap on otherwise exorbitant interest rate charges.

Pay day lenders are the scum of the earth especially in Texas where their interest rates are completely unregulated. It's time to cap these rates - way past time.

Kudos to Senator David and Senator West! :applause:

[sonias]

1. Legislators already revising proposed payday lending regulations

AAS 2/23/11
Legislators already revising proposed payday lending regulations


The powerful payday lending lobby already has Texas senators reworking proposed legislation that would regulate what has become a lender of last resort for many Texans.

Several lawmakers, led by state Sen. Wendy Davis, a Fort Worth Democrat, have filed bills that would prohibit payday lenders and auto title lenders in Texas from sidestepping interest rate caps by charging fees that, in some instances, can push the effective annual percentage rates on short-term loans above 500 percent.

Texas is one of a half-dozen states that don't regulate payday or auto-title loans. In 2009, similar legislation to regulate the industry died in the Legislature without a floor vote.

(snip)
The fees that the broker charges are not considered interest under state law.

I hope Senator Davis doesn't cave in too much. These criminal mafia types need to be reined in.

:kick:

[sonias]

2. Payday Loans Hearing: Lenders in Lobby-Land

http://www.texasobserver.org/lalinea/its-payday-lenders-and-lobby-land-in-senate-hearing">The Texas Observer 2/22/11
Payday Loans Hearing: Lenders in Lobby-Land

Deep within the bowels of the Capitol, lobbyists in expensive suits were crammed cheek by jowl for several hours in a hearing room Tuesday morning. They’re already working harder than in previous sessions for the payday lending industry that employs them. This is the first time legislation to regulate the industry has gotten a committee hearing early enough in the legislative session to actually pass.

The senators in Senate Business and Commerce heard three bills to regulate the industry by Democratic Senators Wendy Davis and Royce West. Together they represent the Fort Worth-Dallas metroplex, which has seen an influx of predatory payday lenders since the industry found a loophole in Texas law in 2005, which allows lenders to charge whatever interest rate they want.

Typically that interest rate is anywhere from 300 to 1000 APR for a loan of up to $2,000. Auto title lenders will loan up to $5,000 to $6,000, if you hand over your car title as collateral. The dirty little secret to the $40 billion a year industry’s profits is the loan rollover. More than 70 percent of borrowers can’t pay their loans and fees in the allotted two weeks. So they have to pay a fee from $60 to $1,200 to renew their loans. Typically, this fee isn’t applied to the principal. And the average borrower will roll over a loan at least five times, according to the nonprofit Center for Responsible Lending.

Business couldn’t be better. The recession is helping these lenders make record profits. Their customer base is growing every year and the traditional banking industry is dropping customers with bad credit right and left. Increasingly, the only lenders left are the predatory ones.

Payday lenders make me sick!
:puke:

[sonias]

3. Foxes In the Henhouse (related story)

Texas Observer 1/20/11
Foxes In the Henhouse

(snip)
Perry, during his long reign as governor, has made a habit of appointing industry executives to the commissions that regulate them. His choice of Cash America’s White to head the Finance Commission is as egregious as they come. Perry appointed White to the board in 2004, then made him chair in 2009, where he’ll serve until 2016. According to Texas law, four of the nine commission members must represent financial industries.

The remaining five seats are reserved for the public, presumably to provide a voice for consumers. Under Perry, nearly all of these seats are held by lawyers and CPAs from corporate firms with clients in the financial service industries, with the exception of Paul Plunket, a former lobbyist for Oncor Electric Delivery. Seven members have contributed, either through PACs or individually, to Perry’s campaigns. Perry has received at least $15,000 from the Cash America International PAC since 2006, according to the nonprofit Texans for Public Justice.

Texas has been good to Cash America, which has 251 pawnshop and payday-lending businesses in the state. Recently the company announced that profits had increased to $81 million in the year ended last October from $63 million a year earlier. Cash America and other payday lending companies advertise heavily on street corners in low-income neighborhoods and offer easy cash on the Internet to borrowers in financial crisis. These “easy” loans carry jacked-up fees and exorbitant interest rates. In Texas, an eight-day payday loan carries a 1,153 percent annual rate—one of the highest in the nation. The average annual rate for loans in other states is 400 percent, according to the nonprofit Center for Responsible Lending. Borrowers find themselves trapped in an endless cycle of poverty, taking out new loans to pay for the ones they already have.

More than a dozen states call these exorbitant loans a form of “predatory lending” and have outlawed them. In Texas, payday lenders can charge as much interest as they want. The Finance Commission, which has the power to protect consumers from unfair loans, has made no attempt to rein them in.

Add Perry to the despicable pond scum pool like the payday lenders, of course!

:puke:

[white cloud]

4. Thanks for the work on this sonia

A major portion of these loans are going to Americas Finest. I have personally witnessed the pain and suffering these military guys can get into.

typical Repug..... stab our military in the back 4$.

[sonias]

5. Pastor Haynes of Dallas sums it up

"If someone is drowning, instead of throwing them a life preserver, in too many instances, we have thrown them shackles," Haynes said. "That is what the payday industry has done to too many individuals."

And it doesn't matter that it's a military family or a soldier who needs a life preserver, these despicable payday loan companies are as greedy and corrupt as Wall Street Bankers - living off the blood of the poor.


:puke: