City of Laredo should follow other cities in regulating payday lenders

Laredo's city politicians have a record of being very business-friendly while at the same time virtually ignoring the plight of the less fortunate.  With their approval of the $1 per transaction fee, they once again bowed to the wishes of HEB.  Many probably agree with this because no one wants to be waiting in line trying to figure out how many bags are going to be needed (fee per bag).

The Mayor pretended to be concerned about the "poor" having to pay for their plastic bags. If this was a genuine concern, he should have also opposed the $1 dollar fee as well.  Also, the mayor was silent when later on in the council meeting, the discussion turned to making our recreation centers more affordable for veterans or the disabled.  Surprisingly, even councilman Garza mentioned the difficulty of a family with four children having to pay $200 in fees anually ($ 50 per year).  Not so surprisingly, no one on the council seconded Garza's concerns.

But I digress; going back to the payday lenders.  The following is from the Dallas Morning News. Notice that the article does not mention Laredo at all when it calls for other cities to follow Dallas's lead in regulating payday lenders. Why is this? Is it indicative of how the rest of the state doesn't really consider Laredo a part of Texas ?   Given our "only in Laredo" style of politics, I wouldn't be surprised.

From The Dallas Morning News

Proponents of payday loans point out that the operations provide a way for cash-strapped consumers to obtain quick cash to tide them over until the next payday. While many of the loans initially are for small amounts to be repaid in full in a short time, consumers who can’t do so often get caught up in a never-ending cycle of debt and fees. In turn, that can engulf neighborhoods and entire communities in cycles of debt, as this newspaper has made clear in editorials throughout the six-years-plus of its “Bridging Dallas’ North-South Gap” project.

The state’s high poverty rates and the number of consumers who don’t have bank accounts make Texas ripe for payday lenders. Dallas ordinances don’t outlaw payday loans but wisely restrict the loan amount that can be extended and the terms under which the loan must be repaid, and require lenders to register and meet tougher zoning rules.

El Paso, Houston, Austin and San Antonio have smartly followed; action from Fort Worth, Irving and Arlington would strengthen the call to action. Cash America and Ace Cash Express, two of the nation’s major payday lenders, are based in Fort Worth and Irving, respectively.

Adding more cities to the coalition is important because, so far, state lawmakers have largely refused to take action against an industry with an enormously active lobby in Austin. Meanwhile, payday lenders have found cracks in municipal enforcement, such as increasing operations in inner-ring suburbs or going online

Reasonable regulations

This newspaper would like to see policymakers:

• Limit payday payments to an affordable percentage of a borrower’s income. Research indicates that monthly payments above 5 percent of gross monthly income are unaffordable.

• Spread costs evenly over the life of the loan.

• Guard against harmful repayment or collection practices.

• Require concise disclosures that reveal both periodic and total costs.