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The payday lenders won’t go without a fight

Where there’s a fight, there’s sure to be lots of money.

Payday lenders were big spenders in the most recent Texas political campaigns – contributing more than $1.6 million to state races in the 2012 election cycle and giving most generously to Republican committee members who soon will be reviewing proposed reforms for their industry.

Storefront lenders – including payday, car title and similar businesses – splurged even more heavily on 2012 campaigns than they did for 2010 state races, according to a Houston Chronicle comparison of contributions reported so far from payday players as identified by the nonprofit Austin-based watchdog group Texans for Public Justice.

And that’s likely a harbinger of a larger lobbying spree to come: The industry backed a multi¬≠million-dollar push in the 2011 Legislature to defeat a proposed cap for payday loan rates, which most other states already control.

“Their clout comes from their ability to put some of their profits into politicians,” Texans for Public Justice Director Craig McDonald told the Chronicle. “They’re not shy about pooling money and going after reps that don’t go along with their wishes.”

Among the biggest beneficiaries of the storefront lending industry’s recent campaign contributions was Sen. John Carona, R-Dallas, who chairs the Senate Committee on Business and Commerce and collected $64,000. Carona insists he’s committed to pushing payday reforms and reining in rates in 2013.

“I can’t speak for other legislators, but contributions obviously have no effect on my position,” he said. “There WILL be legislation to break the cycle of debt and bring down the (annual percentage rates).”

The lenders also contributed $81,000 in an unsuccessful attempt to unseat Dallas Sen. Wendy Davis, a Democrat who’s a major advocate of payday loan reforms, campaign finance data shows.

There are many legislators whose pronouncements that they will not be affected by large campaign contributions from a particular special interest would be laughably ridiculous. I’m willing to give Sen. Carona the benefit of the doubt here, however, since he did do an honorable job with payday lending-related legislation in 2011. Don’t let me down, Sen. Carona.

Payday lenders’ oversized campaign investments concern advocates like Lori Henning, executive director of the Texas Association of Goodwills, part of a coalition of anti-poverty and religious organizations that support limits for lenders whose fees can trap borrowers in a debt cycle and drain resources from charities forced to fund bailouts.

“Obviously it’s a concern when anybody is giving money and hoping they can influence a vote or a decision – what’s difficult is (that) the advocacy groups can’t compete in that level. We’re nonprofits,” she said.

[...]

Advocates like Henning hope that the Legislature will limit loan fees, cap renewals and ban particularly aggressive collection practices statewide.

But lawmakers also could consider simply making all or some of a payday loan industry group’s voluntary “best practices” part of Texas law – adopting laws that require lenders to follow more specific guidelines for disclosures and loan procedures for example.

The former is what real reform looks like, and until we get it we will continue to need such reform in Texas. The latter is what “reform” looks like, and it is to be resisted as being worse than nothing because it will make people think that something has been done when in reality it’s the same as it ever was. It should be noted that Rep. Gary Elkins, himself a payday lender and the leader of the successful opposition to new regulation on the industry in 2011, opposes even these window-dressing measures. For obviously different reasons, I agree with him on that. It’s real regulation or the fight isn’t finished.

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