May
23
Written by:
Mark Lavergne
5/23/2011 7:04 PM
The Texas Senate today approved rule changes for the payday loan industry in Texas. Critics of the industry have said that payday lending preys on low-income borrowers, trapping them in a “cycle of debt.”
One bill, HB 2592, passed by the Senate would increase the disclosure requirements for payday loan companies, requiring them to make clear to potential consumers that payday loans are intended to meet short-term rather than long-term financial needs. It would also require companies to make clear the fees and interest the consumer would be expected to pay back. The companies would also have to post the contact information for the state consumer credit commissioner.
The other bill, HB 2594, would require payday lenders to obtain licenses from the Office of Consumer Credit. Carona emphasized on the floor that each payday storefront, not merely each payday company, would have to obtain the license. The bill would allow the Office of Consumer Credit Commissioner to charge fees for licenses and assess penalties for violations.
The bill would also establish the Texas Financial Education Endowment. The bill would require each payday lender or license holder to pay an annual assessment of up to $200 to improve consumer credit, financial education and asset-building opportunities in the state.
Democrats on the floor offered several amendments to the second bill but, in most cases, agreed to pull them down. Both consumer groups and industry advocates negotiated on the bill and agreed to it on the condition that it would remain completely unchanged when it came to the floor.