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The fox has always guarded the henhouse

News item: Rick Perry appointee says something obnoxious and privileged about the people his company fleeces for his fortune.

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.

Former El Paso city Rep. Susie Byrd spearheaded a payday-lending ordinance early this year that is on hold until the city council debates it on Jan. 7.

White was asked to respond to Byrd’s claim that payday lenders in Texas profit by making people poor.

“That’s really is not worth responding to,” White said. “People make decisions. There’s nobody out there that forces anybody to take any kind of loan. People are responsible for their decisions, just like in my life and in your life. When I make a wrong decision, I pay the consequences.”

Ha ha ha ha ha. Dude, you’re rich and politically connected. You don’t pay consequences for anything. You have people for that.

Anyway. Sen. Wendy Davis took exception to White’s offensive remarks.

Democratic governor contender Wendy Davis is calling on William J. White to step down as chairman of the Finance Commission of Texas for saying people who take out payday loans are responsible for their own situations.

White, vice president of Cash America, should be an advocate for consumers on the state board but instead makes excuses for his own predatory industry, Davis said.

“William White can’t protect Texas consumers while he represents a predatory lending company on the side,” she said.

That’s a feature, not a bug. I’ll get back to that point in a minute. In the meantime, Lisa Falkenberg presses the point.

In April 2012, [White] signed the commission’s resolution complaining of the “complexity” and “confusion” of local payday regulations. He asked the Legislature “to more clearly articulate its intent for uniform laws and rules to govern credit access businesses in Texas.”

In other words, he asked lawmakers to bigfoot (or, pre-empt) local protections, forcing cities to conform to the state’s do-nothing regulation.

[...]

“There’s nobody out there that forces anybody to take any kind of loan. People are responsible for their decisions … ,” White told the Times reporter. “When I make a wrong decision, I pay the consequences.”

There’s nobody out there who makes you buy gas after a hurricane, either, or book a hotel room because your flood-prone house flooded. Yet the state, through Texas Attorney General Greg Abbott, still protects people against price gouging and profiteering on misery after such an event. I guess the misery of the working poor is another matter.

[...]

Earlier this week, Democratic gubernatorial candidate and state Sen. Wendy Davis, of Fort Worth, declared White’s comments a “blatant conflict of interest,” and called on Perry to remove White from the state post.

Perry – no surprises here – isn’t budging. And what from Abbott, the Republican candidate hoping to succeed Perry? As of deadline Tuesday, silence.

The attorney general’s spokesman didn’t respond to a phone message or to a list of questions asking, among other things, whether he would have appointed a payday loan executive to watch over the payday loan industry. Abbott himself has taken more than $21,000 from Cash America’s PAC, according to campaign finance records. He also has promised a fresh perspective and transparency in government.

Here’s a chance to prove it. Abbott should follow Davis’ lead and call for White’s ouster, condemn the commissioner’s comments and show he’s prepared to lead differently, to cast aside old ways, and to replace cronies with competent, fair appointees.

Oh, Lisa. You’re such a kidder. Of course Greg Abbott will never do this. In fact, he’s already defending White. (Sen. Sylvia Garcia, on the other hand, is with Wendy.) Hell, the only reason he goes after gasoline price gougers is because they directly affect everyone, including suburban Republican voters, who scream bloody murder when it happens. The people whose lives are being wrecked by payday lenders don’t have voices that Greg Abbott hears. To him, that’s just the free market. And if it has to be regulated at all, best to have someone at the helm that really, truly understands the needs of the businesses that are being regulated. Anyone besides me remember the Texas Residential Construction Commission, or TRCC? Remember who Rick Perry appointed to be the first head of that commission? Here, let’s take a stroll down memory lane.

Consider how the Residential Construction Commission came to be created and how it was appointed.

According to a report released earlier this year by public advocacy groups, Texas homebuilders donated $5 million to executive and legislative candidates, political parties and political action committees during the 2002 election cycle, which completed the Republican takeover of the statehouse.

Houston homebuilder Bob Perry, a major contributor to Gov. Rick Perry and Republican causes, gave $3.7 million of the total.

Bob Perry (who isn’t related to the governor but obviously shares his political philosophy) and other homebuilders were a driving force behind creation of the new commission. The new law established some construction and warranty standards for the new agency to regulate, but its primary purpose was to offer homebuilders protection against lawsuits brought by unhappy customers.

Homeowners now have to go through an expensive, commission-run dispute resolution process before pursuing any legal action over construction complaints. This is more bureaucratic and potentially more intimidating than the mandatory arbitration process that most builders already required in new home contracts.

The law also limits the damages that homeowners can recover, and the makeup of the commission has consumers justifiably concerned.

The law requires four of the nine commissioners to represent builders. State regulatory boards typically include some members of the industries being regulated.

The argument is that technical, industry input is necessary for effective regulation, but the fox-and-henhouse practice also is a testament to the lobby’s influence.

Two of the “public” members appointed to the Residential Construction Commission by the governor also have strong ties to the homebuilding industry. And, even more troubling for consumers, one of the industry representatives, John Krugh, an executive of Bob Perry’s homebuilding company, was appointed to the commission by Rick Perry less than a month after the governor had received a $100,000 political donation from Bob Perry.

The governor’s office denied any connection between the contribution and the appointment, but skeptical consumers should be forgiven.

The TRCC was such a crony-tastic debacle that it finally got sunsetted in 2009. But the philosophy is ever with us. William White is just John Krugh in another context. Same story, different chapter. And it’s always been fine by Greg Abbott. If Greg Abbott had ever had an inkling to put the interest of consumers over the interest of business, he’d have shown it before now. If you want that to happen, you don’t want Greg Abbott as Governor, because he’ll keep doing what he and Rick Perry have always done. It’s nothing new, and it’s not a secret.

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