AUSTIN – Texas religious leaders joined state lawmakers Friday at the State Capitol, calling for a new law to help end predatory lending in the state.
A similar effort failed last session, but supporters believe they have bi-partisan support and support from up above.
“Its not at all atypical for a person who takes out a payday loan to end up paying over a 1,000 percent interest rate in the form of fees and interest that is charged,” said State Sen. Wendy Davis, D-Fort Worth. “All we are asking is that they be included under that chapter of the finance code, to assure that they are fair.”
Davis says in 2005, the payday and title-loan industry found a loophole in state law, meaning they are exempt from many of the state's banking regulations.
She is proposing a law which would close the loop-hole which she says has opened the door for thousands of payday lenders to set-up shop in Texas over the last five years.
“More and more, in this economy, people who never expected they would walk in the door and do that, are finding themselves doing it,” Davis said.
If you find one payday loan store, you will likely find many more. They tend to cluster together in historically poor neighborhoods.
Take Austin’s E. 7th St.; at least eight separate title loan or payday loan stores in the one-and-a-half mile stretch between Springdale Road and Comal Street.
Suzii Paynter of the Texas Baptist Convention says there is a religious reason the state should crack down on lenders.
"Church by church, community by community, people whose lives are being destroyed, are walking through the doors of pastors office and Sunday school classrooms, breaking down in tears, because they’re life is being torn apart by this,” Paynter said. “They were expecting a trusted loan process, and they were surprised by the predatory nature of it.”
In fairness, many of the terms of the loans are spelled out in the fine print.
The loan industry was able to beat back a similar challenge in the past, saying their loana, if used rarely and responsibly, provide nothing more than needed cash in a hurry.
