Texas has been fighting a new battle, and no I am not talking about the drug smuggling across the border or illegal immigration but the battle over abusive lending practices, specifically payday lending and title loan companies. What is unique with the situation in Texas is that the fight is not on the state level but local governments having had enough and with a strong push by these local governments voters tough new measures have been enacted throughout much of the state.
Legislation on a state level might not happen in 2015. Lobbyists defeated every measure that was presented on a state level in 2013 for example, backed by a steady flow of money from lobbyist bank accounts. Texas also sadly has politicians directly profiting off of other peoples misery such as Rep Gary Elkins of the Texas House of Representatives who owns a payday loan company. Speculation is that Lt. Gov. David Dewhurst and House Speaker Joe Straus will step back from any potential state legislation efforts on the payday and title loan industry which in Texas is booming. Entire neighborhoods in Texas are dotted with fast cash and payday loan shops.
There is a glimmer of hope for 2015 however as Straus stated during an editorial board interview that he fully expects legislators to review regulatory options and make recommendations before the next session. GOP Sen. John Carona of Dallas had sought reform of the loan industry in Texas in 2014 but again due to heavy lobbyist activity he did not get very far this year.
The payday loan industry itself is fighting back against any reforms, in 2014 they tried to convince legislators to curb the ability of cities like Austin, Dallas and Houston from adopting muscular codes to curb lending practices. The payday loan industry is backing gubernatorial candidates Greg Abbott in the tune of $402,959 at the time of this writing, while they backed Davis by only $10,500. The sheer amount of money being thrown around by the loan industry in the governor, house and senate level is the reason why no meaningful legislation has made it past a committee and to the full floor. This the reason why local governments have taken on the loan industry head on, since the state level government is doing nothing. Various cities throughout however have passed ordinances which have:
Curbed the amount of times a loan can be rolled over
Set forth minimum payments such as in Austin you must pay at least 25% of your payday loan per payment.
Capped amounts of loans to income gained.
Some cites have created cooling off periods baring customers from obtaining new loans for a set amount of time.
There is a growing statewide effort to reform payday lending, but the fight is up against long odds. Dallas, Houston, Austin and many other cities across the state have enacted tougher rules on payday lending in 2014 so that shows that the citizens of Texas want change and want reform, but again it remains to be seen how politicians on the state level will proceed due to the payday loan industry financing their campaigns, not to mention several law makers being directly involved in the industry. The good news is that the cities are winning their fights, but other cities in Texas have yet to join the fight such as Fort Worth, Arlington and Irving.