SENATE HEARING:

Wednesday May 18th: Senate Business and Commerce will hear HB 2592 (and possibly) HB 2594. 

ONE PAGERS ON HB 2952, 2953, AND 2954:

Baptist Christian Life Commission
Texas Impact
Texas Catholic Conference

PRESS RELEASE:

“Texas Faith for Fair Lending:”

Religious Leaders Call for Reform in Payday Lending Regulation

AUSTIN— Leaders from Texas’ faith communities came together today as the “Texas Faith for Fair Lending” coalition to call for reform in the regulation of short-term loans such as payday and auto title loans. Currently, these lenders are operating as "Credit Services Organizations" using the credit repair statute to avoid limits on rates and fees. The result is that Texans that have borrowed money in a crisis end up trapped in a loan, regularly making payments, but never reducing the amount owed. A $300 loan taken out in a financial emergency often costs $850 to pay back. Our faith compels us to speak out against this type of practice.

Vásquez said that in 2010, Catholic Charities agencies throughout the state provided over $1 million in financial assistance to clients trapped in payday loans.

The faith leaders brought with them a red wagon containing nearly 3,000 postcards signed by individuals throughout the state asking lawmakers to close the payday-lending loophole, known in the Finance Code as the “CSO loophole.” Faith groups are asking lawmakers to close the loophole that allows payday lenders to operate outside of the limits on usury in the Texas Constitution by describing themselves as “credit service organizations,” and to charge fees that other lenders may not charge. These fees carry annual percentage rates upwards of 500%.

Reverend T. Randall Smith, President of the interfaith group Texas Impact, said that during these difficult financial times for the Texas and Texans, addressing predatory lending is one positive thing lawmakers can do for Texans that will not cost the state any money. “These high cost loans are hurting Texas families. They are immoral, unethical and in direct contradiction of the religious values that most Texans hold.” [MH1] Smith said.

Reverend Dr. Frederick D. Haynes III, Senior Pastor of Friendship West Baptist Church in Dallas said that too often he sees members of his community “turn to these loans seeking a life preserver while drowning in a financial emergency, but instead they are thrown shackles that tie them to a cycle of debt.”  

Payday lenders aggressively market a loan product that uses a cash advance which is needed in a crisis to be the gateway to a cycle of debt of recurring high fees and no meaningful principal reduction. “The Texas legislature is tasked with setting the rules for a fair lending.” Rev Jeff Johnson, First Baptist Church, Del Rio,  said “ We ask Texas legislators to end the lending practice that perpetuates a cycle of debt, to stop allowing payday and auto-title loan  companies  to operate as credit repair organizations and to regulate the industry with reasonable rates and fees for Texas families.”

In addition to the postcards, the religious leaders said that city councils in more than a dozen large Texas cities have adopted resolutions calling for payday lending reform.

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