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'via Blog this'In the two years leading up to the past legislative session, payday lenders paid Texas lobbyists between $3.9 million and $8.4 million in contracts, according to a study by Texas for Public Justice.
Soon after Councilman Diego Bernalannounced his push for an ordinance to curb predatory lending in San Antonio, the sharks started circling.
“They're all over the place,” Bernal said. “And they're all over me.”
In this case, the big fish are the lobbyists for payday and auto title lending companies, which offer short-term, high-interest loans to people who can scarcely afford them, raking in huge profits by locking consumers into cycles of debt.
It's not surprising they're circling Bernal so densely.
In the two years leading up to the past legislative session, payday lenders paid Texas lobbyists between $3.9 million and $8.4 million in contracts, according to a study by Texas for Public Justice.
In many ways, they got their money's worth.
At the Capitol, state Sen. Wendy Davis, D-Fort Worth, was trying to regulate the industry in a meaningful way.
A bill by Davis would have closed a loophole that allows these lenders to organize as unregulated middlemen, thereby circumventing state laws against high interest rates.
She was also trying to force the lenders to agree to more reasonable fees.
Currently, these fees balloon so monstrously that many borrowers perpetually dole out cash without even scratching their principal, on which they're not permitted to make partial payments.
But in Austin, the lobbyists stalled, pretending to negotiate with Davis before embracing House bills that require their clients merely to get licensed, provide data and post fees.
“It was the money that stopped the reforms,” says Craig McDonald, director of TPJ. “It was the power of the lobby and the power of their money that really stopped some of the most significant reforms in the last Legislature.”
McDonald understands why cities such as San Antonio, Austin and Dallas are fighting back.
“It was a clear sign that the Legislature was only willing to go so far to put a little window dressing on what really is an ugly hog,” he said.
The TPJ study also found that payday lenders contributed nearly $1.4 million to Texas politicians in the two-year 2010 election cycle.
Nearly a third of the money flowed to four powerful Republican leaders: House Speaker Joe Straus, Lt. Gov. David Dewhurst, Attorney General Greg Abbott and Gov. Rick Perry.
The fifth top politician to receive money from the industry was state Rep.Vicki Truitt, R-Keller, the lawmaker who drafted the watered-down regulations.
Perry, meanwhile, appointed William White, former executive of payday-lending company Cash America, as chairman of the Texas Finance Commission, the agency charged with regulating payday lenders.
On Wednesday, after City Council members agreed to draft an ordinance to address the problem locally, Tim Von Kennel explained why the industry opposes Bernal's efforts.
“We need to have regulation,” said Von Kennel, executive director forConsumer Service Alliance of Texas, an association of payday lenders. “And we're advocating state regulation over municipal ordinances.”
I've already outlined what “state regulation” looks like at the Capitol, where money seeps into cracks and distorts laws.
As for why Von Kennel is averse to “municipal ordinances,” Bernal's reaction to the circling sharks is enlightening.
I asked the councilman how he responds to lobbyists' entreaties to consider the perspective of payday lenders.
“How do I say this?” Bernal responded.
He paused for a few seconds, presumably to craft a politic answer.
“I sort of tell them,” he said, “to go (expletive) themselves.”
bchasnoff@express-news.net
OOOOooooooh Yes!
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