Rep. Vicki Truitt, chair of the Texas House Pensions, Investments, and Financial Services Committee, is getting involved in legislation regarding payday loans. The ongoing legislative dispute is attempting to find a middle ground that drives out lenders who prey on customers, while preserving the industry.
Rep. Truitt recently introduced legislation that places car title and payday lenders under the supervision of the Texas Office of Consumer Credit Commissioner.
Rep. Truitt is also starting negotiations between consumer advocates and industry representatives. The goal is to get past the long-standing stalemate that stands in the way of legislative compromise. She feels that both parties have squashed previous bills that could have made improvements in the industry.
Her involvement is designed to ensure this does not happen in the future.
Texas Senators Royce West and Wendy Davis have introduced legislation to close a loophole. This gap permits lenders of car title and payday loans to
operate outside of the regulations used to govern other lenders. Sen. Davis said that short-term loans arranged by storefront lenders often have fees and interest rates that, when combined, are greater than a 500 percent annual rate.
Some Texas consumers informed the Senate Business and Commerce Committee that loans like this worsened their debt situation. Industry officials have expressed willingness to accept regulation that they consider reasonable. They feel the proposed legislation includes harsh new restrictions and price controls that could push them from the state.
Even if the lenders leave, there will still be a demand for payday loans, says Rep. Truitt. Organized crime operators could step in to assume their role, while thousands of industry workers will lose their jobs. Bills proposed by the Rep. will require lender registration with the Consumer Credit Commissioner and the filing of annual reports.
This would make it easier for officials to identify unethical lenders and punish them for unacceptable practices.
