Full Disclosure: In the last half of 2011 and first couple of months of 2012 Cash Advance and ACE were clients of Commentary. I am on the sidelines these days.
The ‘Stros announced yesterday that reliever Matt Albers will be coming back to be part of the bullpen. Albers made his MLB pitching debut with the ‘Stros in 2006. We went 82-80. Name the ‘Stros pitcher with the most Ws in 2006?
Today Council will take up the payday lending ordinance. Personally I don’t think this should be a City of H-Town function. We need to spend our time making sure restaurant kitchens are clean, the construction of buildings are within code, Rebuild Houston is efficient and effective, our parks are clean, our drinking water is safe, and illegal trash dumpers are nabbed. It is a philosophical thing with me.
In today’s front page of the Chron that is only available to subscribers or hard copy owners there is a story about spotty enforcement of payday lending ordinances in other Texas cities. Check it out here:
If the Houston City Council passes proposed restrictions on payday and auto title lenders at its Wednesday meeting, Texas’ largest city would lag some of its peers by more than two years in
enacting rules to stop poor borrowers from getting trapped in a cycle of debt.
But, taking a lesson from Dallas, Austin, San Antonio, El Paso and several smaller cities, City Attorney David Feldman and other local officials say Houston will have a plan to enforce the ordinance up front, rather than tripping through a rollout months after the new rules become law. To varying degrees, officials in those cities accept that critique.
It’s not clear when or how council will vote; the ordinance has been the subject of intense lobbying efforts, and plots of parliamentary intrigue suggest the item could be pushed to next year.
Regardless of when or whether the rules become law, Mayor Annise Parker has acknowledged even stringently enforced city-by-city reforms will have only a modest effect given the Legislature’s failure in each of the last three sessions to pass statewide regulations.
The ordinance, which limits the size of a loan and the number of times it can be refinanced and dictates how much principal must be paid down with each installment, is meant to help borrowers like Houston’s Yvonne Norris, who got a title loan to pay for her brother’s funeral and paid almost $5,000 on the $2,100 principal.
Had the ordinance been in place, she would have been able to borrow just $263; Norris said she likely would have sought the rest of the money she needed from friends.
Norris used her rent money to pay the loan off this month, then had to get a second title loan to pay rent. She now is paying $280 a month, more than a third of her income, and fears her late brother’s car will be repossessed.
“I jumped out of the pot and got into the skillet,” Norris said. “I know I can’t pay it off. You can only do so much.”
Few court actions
Though some of the other cities’ rules have been in place for two full years, no one familiar with the issue knew of any more than a few municipal court actions among them, and say only Austin has hired an employee dedicated to enforcing the rules. The cities instead have relied chiefly on consumer complaints.
“Complaints are always going to rely on borrowers. You have to have that education component,” said Brett Merfish of nonprofit Texas Appleseed, which crafted the ordinance as a template, advocates hope, for statewide reform. “Were Houston to put in a different mechanism for enforcement, we would support that.”
Rob Norcross, a lobbyist with payday industry group Consumer Service Alliance of Texas, which has sued several of the cities over the regulations, said Dallas defended itself in court in part by arguing it wasn’t enforcing the ordinance. Businesses that are following the rules, he said, are losing customers to those that are not.
“None of the cities that have passed the Dallas ordinance are enforcing the ordinance,” Norcross said. “There are a couple of cities that have said, ‘If anybody complains, we’ll investigate the complaint.’ Nobody’s complaining if you’re violating the ordinance because it’s business as usual.”
Audits planned
Martha Hernandez, who was hired to handle enforcement of the ordinance for the city of Austin, said four complaints have been referred for prosecution in 19 months. Her staff is nearly done with an analysis showing which lenders are most likely violating the ordinance, based on the accuracy of their reports, complaints and other data. That list will guide compliance audits, she said.
“Our process, we anticipated it would be complaint-driven, but there’s just not very much demand on that. We’re constantly looking at what we can do to better inform the public about the ordinance,” Hernandez said. “The plan has always been to do audits in tandem with the complaint-based investigations.”
Dallas City Councilman Jerry Allen said more than 30 lenders were closed for violating a 2011 ordinance governing where the stores could operate, but agreed Dallas’ enforcement has been slow. The lenders’ lawsuit made the city cautious, he said, and officials paused to see if the Legislature would act.
“I wish it was quicker, but we’ve had a pretty organized approach to it. Without question, it’s now time for enforcement,” Allen said, adding audits could come in weeks. “Dallas is coming. We will find violations, it’ll be $500 a day, and we’re going to keep coming.”
San Antonio Councilman Diego Bernal said his city has hired no staff and acknowledged the first year under the new regime was quiet. However, he said, workers have begun stings, and he said there is enough public awareness that valid complaints are coming in.
“Some of the violations have been rectified: They weren’t registered and so we got them registered. Now we’re at a point where what we’re left with are bad actors that are purposefully violating the ordinance,” Bernal said. “We’re pursuing all enforcement options, one of which is full-on litigation.”
July 1 target date
Houston plans to begin enforcement on its estimated 550 such lenders July 1 to give proper time to staff up, Feldman said.
“Typically you wouldn’t expect that someone who goes in who needs the loan is going to have the wherewithal to say, ‘Wait a minute, you’re violating Houston’s city ordinance, I’m trying to extend my loan for the fifth time but you can’t let me extend my loan for the fifth time,'” Feldman said. “That’s why we’re going in with a plan to actually enforce it. It’s obviously something that requires not just manpower but skilled manpower.”
The city’s Administration & Regulatory Affairs department projects it will need to add four staff to comb through records at a rate that ensures each lender is audited at least once every three years.
The other thing is what is to prevent someone to just go outside of the City limits to get one of these loans.
There was a draft compromise on the table a year ago that the Mayor’s City Attorney drafted. Now it is off of the table. I don’t know why the Mayor snatched it off of the table. Some folks are speculating as to why. Stay tuned!
Ray Price is no longer with us. Every time Ray Price’s name is brought up I fondly remember an evening in Del Rio when I was working on a statewide campaign in the 1970s. My host Del Rio attorney Mike Gonzalez took me to a restaurant bar owned by Ray Price’s piano player Blondie Calderon. Calderon sat at his piano and played his favorite tunes for us. It was a very cool experience.
Roy O. of course won 15 games for the ‘Stros in 2006.
That’s all there is from The Yard!
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