The state Senate is considering a measure to
constrain "payday lending" practices.
Texas leads the nation in businesses that offer short-term,
unsecured loans, typically to low-income borrowers trying to make
ends meet until the next paycheck. Lenders argue that the loans are
risky and warrant high interest rates and fees. Critics call the
loans "predatory" because borrowers often don't realize they have
Ron Rogers, who counsels low-income workers in the Rio Grande
Valley, one of the nation's poorest regions, says that in today's
economy payday lending is more widespread than ever.
"You see signs everywhere: 'Easy credit.' 'Fast credit' 'Get it
now.' Well, the least among us are ones that are the most
susceptible to falling for something like that. It's pretty
Rogers is president of the South Texas Adult Resource and
Training Center (START) in San Benito, where he says there are
only three banks but 15 payday lenders. Rogers says those lenders
are sucking what little wealth there is out of the community. START
steers would-be borrowers toward alternatives such as credit unions
and employer pay advances.
Rogers supports the pending legislation, which would cap fees and
the size of payday loans, and provide repayment options. He also
wants to limit interest rates, which he says can add up to as much
as 500 percent in the course of a year. About one-third of states
regulate payday loans, but with the industry's heavy footprint in
Texas, Rogers is fearful the bill will have a tough time becoming
"This industry has strong lobbyists, and many of the lobbyists are
associated with a lot of state senators and state representatives.
They are powerful."
SB 1862, the measure that passed the state Senate Committee on
Business and Commerce, would restrict payday lending to 35 percent
of a borrower's monthly income and cap fees at 15 percent. Its
author is Sen. Wendy Davis, D-Fort Worth.