Chair Grants Davis Last-Minute Hearing, But No Vote, on Payday Lending Legislation
AUSTIN — Senator Wendy Davis today stood with Texas families and testified before the Senate Committee on Business and Commerce on behalf of legislation she has authored intended to increase oversight of the predatory payday lending industry. Today's hearing, which comes with less than a month left in the 81st legislative session, was attended by a swarm of industry lobbyists, many of whom registered against the legislation but declined to testify on the record.
The payday lending industry is currently operating with virtually no oversight, because they have organized themselves as Credit Service Organizations instead of lenders, thus operating outside the scope of usury laws and other lending regulations. Payday lenders are quick to claim that they are subject to regulatory laws, but Senator Davis noted that none of those rules protect consumers from unfair lending practices and that there is no agency charged with enforcing these regulations.
"It is absolutely the case that you can rattle off a list, as the gentleman did earlier, of regulations that Credit Service Organizations purportedly operate within. The most important piece missing, however, is the amount of the fees and the amount of the interest," Senator Davis said. "Because we don't collect data, because we have no one who oversees the industry, we don't even understand how bad the problem is."
Leslie Pettijohn, Consumer Credit Commissioner, said no agency has regulatory oversight of payday lending. "We don't have any jurisdiction [over complaints]. We often try to pass them to the Attorney General's office. They often try to send them back to us."
Senator Davis expressed frustration that the payday lending lobby has been able to stifle past efforts to bring them under fair lending laws, but expressed determination to continue working on the issue until the industry can be reformed.
"I will continue to work on this issue, whether it is this session, or the next session, or the next, until we finally do what we should be doing," Senator Davis said. "And I certainly hope that our bills will be moved for a vote."