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Payday lending becoming an issue in Texas for 2014

The El Paso Times has recently brought the issue of payday lending in Texas to light, Payday-lending official: Borrowers responsible for their decisions.

The official who oversees Texas’ consumer watchdog says payday-loan customers — not the lenders — are responsible when the loans trap them in a cycle of debt.

William J. White says it’s out of line to even question an industry that has had its practices called exploitative by many critics, including the Catholic Church.

White was appointed by Gov. Rick Perry to chair the state agency that oversees the Office of the Consumer Credit Commissioner, which is responsible for protecting consumers from predatory lending practices.

White also is vice president of Cash America, a major payday lender that the new U.S. Consumer Financial Protection Bureau last month socked with its first sanctions for abusive practices.

White didn’t return calls earlier this month for a story about his dual roles as payday lender and consumer defender. But, on Dec. 12, as the Finance Commission wrapped up its monthly meeting in Austin, he agreed to answer a few questions.

“What you’re doing is totally out of line,” White said, as the interview wound down. “This fox-in-the-henhouse stuff is totally political.”

His company and others in the industry have been accused of making payday loans to desperate people in amounts they can’t afford to repay. Customers become trapped in a cycle in which all of their disposable income — and some non-disposable income — goes to payday lenders, critics say.


As the name implies, payday borrowers take out loans against their next paycheck or some other regular payment, such as a Social Security check, said Ann Baddour, a senior policy analyst with Texas Appleseed, an Austin-based non-profit that seeks to defend the rights of vulnerable populations.

She said the average fee on such loans is 25 percent. So if a borrower takes out a two-week loan for $400, he or she owes $500.

If, at the end of the first two weeks, the borrower can’t pay, the loan is rolled over and two weeks later, if the borrower pays $100, he or she still owes $500. In that scenario, the borrower could pay $100 every two weeks and not scratch the principal amount of the loan.

“You keep paying and what you owe never changes,” Baddour said.

As the article goes on to show the payday loan industry has ties, to both parties, in The Lege.

Proponents of regulations to ensure borrowers don’t get stuck in debt seem to have failed to get the Legislature to pass a law and getting Perry, who appointed White to the finance commission, to sign it.

A report by Texans for Public Justice shows that between 2009 and 2012, prominent Republicans such as Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus were the biggest recipients of campaign funds from the payday lending industry. But it also showed that more liberal-leaning officials and groups such as state Sen. Letitia Van de Putte and the Texas Legislative Black Caucus also received five-digit contributions.

The Democratic candidate for governor, state Sen. Wendy Davis, is a major proponent of increased regulations and is not on the list of big recipients.

Advocates have focused their efforts on Texas cities. Last week, Houston joined Dallas, San Antonio, Austin and El Paso as major cities to pass ordinances.

There are concerns that El Paso’s ordinance might be eliminated even before it takes effect.

City Attorney Sylvia Borunda Firth last week said that El Paso Bishop Mark J. Seitz has visited City Hall personally to lobby in favor of the ordinance, which limits the percentage of income that can be borrowed and the number of times the loan can be rolled over.

Seitz could not be reached for this story, but a statement by the Texas Catholic Conference sets out the church’s position.

“In the teachings of our faith we have many warnings about usury and the exploitation of people,” it says. “Lending practices that, intentionally or unintentionally, take unfair advantage of one’s desperate circumstances are unjust.”

Whether one thinks of payday lending whether it’s immoral, unjust, or just plain wrong, it’s hard to argue that one of the main players in the industry should be overseeing the consumer watchdog for payday lending.

Which is why Wendy Davis is starting the New Year with a bang.  Highlighting Gov. Rick Perry and the GOP’s closeness to the immoral Pay Day loan industry is a perfect issue.  It shows how the GOP favors the powerful over the people and works well with Davis’ campaign theme of giving voice to the voiceless.  Texas state Sen. Wendy Davis calls for official’s removal over payday lending views.

he finance commission, which White chairs, oversees the state agency that is supposed to protect Texans from predatory lenders, but White is also a vice president of Cash America, a payday lending company that was sanctioned by the federal government last month for violating the law and obstructing the investigation.

White claimed that Cash America voluntarily reported its violations and suggested ways to fix them.

He also said, in essence, that borrowers are to blame if they find themselves unable to repay Cash America payday loans that carry an annual interest rate of 533 percent.

In a statement, Davis said White’s comments were beyond the pale.

“Texans are tired of back-room deals and dishonesty in Austin,” Davis said.

“William White can’t protect Texas consumers while he represents a predatory lending company on the side. Mr. White should resign from his post — and if he won’t, Governor Perry should remove him.”

The campaign of Davis’ likely Republican opponent. Attorney General Greg Abbott, did not immediately respond Monday when asked if Abbott thinks White’s presence on the finance commission is appropriate.

Perry’s office earlier this month reiterated its support for White, but it also did not immediately respond Monday.

Here’s more from the El Paso Times, Texas finance panel’s actions attacked. Again this fits perfectly with the GOP’s long-held strategy of protecting the interests of business and corporations at the expense of working Texans and consumers. This is one of those issues that almost everyone agrees on, except for those who need campaign contributions to win their next election.

Further Reading:
Fast Cash: How Taking Out a Payday Loan Could Land You in Jail.


One Response

  1. […] & Eggs, Dos Centavos, Eye on Williamson and Off the Kuff have […]

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