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Payday Lending Reform Bill Stalls in Texas House Committee

Veronica Zaragovia for KUT News

A Texas lawmaker told the media this morning he's not ready to give up the fight to reform so-called payday and auto-title lending. These are typically low-dollar, high-interest loans.

State Rep. Mike Villareal, D-San Antonio, chairs the House Investments and Financial Services Committee, where the latest version of the bill is stuck. He said he's the sole member of the panel who's solidly behind the bill, and presently three members stand against it. The panel has seven members and needs to pass out of Investments and Financial Services in order to reach the House floor. 

If the bill dies in session, Rep. Villareal said he will dedicate the next two years between sessions to this issue.

“I’ll be traveling city to city, trying to put in place the consumer protections we were not able to pass at this state House," he told reporters at the Capitol.

The bill originally came out of the Senate as SB 1247 by State Sen. John Carona, R-Dallas. As it stands now in the House, the bill would limit the number of times a person can renew or refinance these loans. In Texas, a consumer can presently renew them infinitely. The bill would bar cities from enacting new regulations for six years.

Some Senators, including State Sen. Rodney Ellis, D-Houston, and State Sen. Wendy Davis, D-Dallas, said they're concerned the bill has been significantly weakened since it left the Senate floor, but they are confident that if it does come out of committee and passes the full House, that the two chambers will work out the differences.

Don Baylor, Jr., a senior policy analyst with the Center for Public Policy Priorities, said the average person renews it about seven times.

"At least 1 million Texans are using this product," Baylor said. "We know public school teachers use these loans given their pay cycle is interrupted for a bit, we know health care professionals use these products. About 35,000 vehicles were repossessed in Texas last year. That's about 100 a day."

Texas does not regulate the size of these short-term loans, puts no caps on the interest rates, fees and term limits, but there are regulations at the local level in some cities, including Austin.