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Council hears the Mayor’s payday lending ordinance

Reaction was mixed, though it appears likely there is enough support to pass.

The proposed ordinance would limit payday loans to 20 percent of a borrower’s gross monthly income and auto title loans to 3 percent of the borrower’s gross annual income or 70 percent of the car’s value, whichever is less. Single-payment payday loans could be refinanced no more than three times, while multiple-installment loans could include no more than four payments. The principal owed would need to drop by at least 25 percent with each installment or refinancing.

Skeptics on council said the proposal could drive payday lenders outside city limits, hurting borrowers’ access to credit. Councilwoman Melissa Noriega also cautioned against viewing all such lending as nefarious, saying she knows a woman who takes out a title loan each year to buy school supplies.

“It’s very important that we not make life more difficult for poor families while we assume that we’re helping them,” she said. “I’m not saying we’re doing that; I just think that’s one of the key concerns here.”

Noriega’s concerns about what would replace payday lenders were echoed by Councilman Ed Gonzalez, who said he worried about constituents visiting a loan shark at the local cantina, and Councilman Jerry Davis, who said he did not want residents turning to “Good Times” character Lenny, a neighborhood hustler, for credit.

“I don’t know that Lenny the loan shark is much worse than the worst of the payday lenders,” Parker replied.

City Attorney David Feldman added that, while many payday lenders fled Dallas when it adopted its restrictions, the same has not been true in San Antonio.

One thing I want to point out: If you go back and review the Mayor’s proposal, you will note that nowhere in there does it put a limit on the interest rate that these lenders can charge. That means they will still be free to impose a 612% APR on their loans, while claiming they’re just charging 20% and doing their best to obfuscate what it all means. Seriously, go read this account by Forrest Wilder of taking out a “payday loan” that turned out to be a new mutation on the form that was aimed at slipping through the city of Austin’s regulations. That’s what we’re dealing with here. I understand Council’s concerns, but for the most part I don’t share them. I don’t see what’s being proposed here as needless or particularly burdensome. The item will be on Council’s agenda for December 11, which means it will likely be voted on the following week after getting tagged. Texpatriate and Stace have more.

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3 Comments

  1. Bill Daniels says:

    Lenny the loan shark probably didn’t have a business license, pay tax, pay payroll tax on his employees, etc. And the loan shark who hangs out at the local cantina doesn’t pay property tax on his loan headquarters, either.

    Mayor Parker, in her zeal to help the poor, will find herself lowering Houston’s tax base…..you know, the same tax base she uses to fund programs for the poor.

    Even forgetting all this for a moment, Mayor Parker is being paternalistic. “Oh, Houston’s poor are too stupid to take care of themselves, so Aunty Anise will step in to save them.” Way to empower people to make their own decisions, Mayor.

    Making bad decisions (like getting involved with payday/title lenders) is SUPPOSED to hurt. It’s like touching a hot stove. You touch one, and learn not to do that anymore., or you accept the consequences of being burned, over and over.

  2. joshua ben bullard says:

    I would ask all council members to vote against the mayors proposal entirely=heres why,the mayor doesn’t have any “victims” ie complainants=when is the last time you drove down the street and saw Houstonians protesting pay day lenders=never=they don’t exist,the mayor is attempting to create a need without a single constituent requesting action=another example=district c ellen cohen=shes got two or 3 payday lenders in her district and quess what=to date not a single voter in her district has lodged a complaint or concern=not one,not one complaint,not one protest ever,heres where the mayor is attempting legal gymnastics=she reaches to other citys in texas and trys to do a comparative=what she doesn’t want to remind you of is this=The other cities in her examples are struggling financially with huge unemployment rates=she would rather you forget that she ran around Houston for the last 8 months screaming and yelling that Houston has the hottest economy in the nation=she wasn’t lying,”were ballin”the problem is,take councilmember Noriega,and ask her=do you want to create a criminal element?ask ellen cohen ask mike laster=loan sharks will return to the city and that concerns me,it will also cost tax payers a fortune on the law enforcement side,The mayor needs to be redirected on the big picture,if ellen cohen in district c and mike laster in district j don’t have anyone in their districts complaining then it makes logic sense they both would not vote with mayor parker=think about it=your mayor is running around the city screaming that shes gotten the economy in the best shape nation wide but on the other block shes trying to convince you the sky is falling because the pay day lenders are braking us=it doesn’t make any since=heres what makes more sence=some one needs to go tell the mayor that in fact =the sky isn’t falling=there is no one complaining about pay day lenders, except her and remind her that houstons ecomony is peaked above the nation,were good===voting with the mayor , strongholding payday lenders with out a single complaint from a citizen is wrong is unjust and has no place in Houston,mayor parker continues to let me down….

    how about those sidewalks in blueridge redwood subdivision,its been years since the mayor promised the kids of blueridge a safe sidewalk to school at jr Reynolds elementary=she even campaigned that its already been done but to date she still hasn’t had them installed.
    how you like them apples
    Joshua ben bullard

  3. Doug Hunter says:

    You won’t see a rush to leave the city limits by such loansharks any time soon. They locate close to the neediest people and will remain close no matter what regulations are thrown at them, much like the strip clubs. It’s just too lucrative to remain so drop the neo-con malarky, Dallas lenders had other reasons to move than just their regs.

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