AUSTIN—With time running out in the Texas Legislature, a bill to reform and regulate payday and auto-title lending in Texas appears stuck in committee, said Stephen Reeves, director of public policy for the Texas Baptist Christian Life Commission.
The Texas Senate voted 24-6 to approve a bill filed by Sen. John Carona, R-Dallas, chair of the Business and Commerce Committee, after amending it to include a series of tough provisions, including one that allows cities to establish local ordinances to regulate payday and auto-title lenders.
Compromise version
Mike VillarealRep. Mike Villareal, D-San Antonio, crafted a compromise version of the bill for the House, where observers had predicted some aspects of the Senate version made it unlikely to pass.
Although the bill was weaker than the final version that passed the Senate, Reeves noted it contained several of the friendly amendments Carona had agreed to accept, and he felt the House bill “represented real compromise by all sides, incremental progress and should move forward in the process.”
However, Villareal found himself the only strong advocate for the bill in the Committee on Investments and Financial Services, which he chairs, and the legislation is stalled there.
Lobbyists were busy
Hearings before the committee drew out-of-state executives in the payday and auto-title lending industry, as well as industry lobbyists and attorneys, Reeves noted. The industry hired 82 lobbyists with contracts totaling $4.4 million to squelch any attempts at regulation, according to a report by Texans for Public Justice.
Consumer advocates point to studies that show payday and auto-title lending traps significant numbers of Texans in a cycle of debt they cannot escape, with interest and fees that amount to more than 700 percent annual interest.
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Texas remains the only state with short-term lending that does not place restrictions on interest rates, rollovers, fees and term limits. However, Dallas, El Paso, San Antonio and Austin have local ordinances in place, and Houston has an ordinance pending.
“I’m not interested in putting my name on a paper tiger,” Villarreal said at a press conference. “If we cannot pass a meaningful bill at the state level, then the cities need to be empowered and encouraged to pass ordinances.”
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