Spelman sets sights on high interest payday loans
By Wells Dunbar,
1:22PM, Fri. Aug. 12, 2011
The lightly-regulated world of payday lending – high interest loans to working class citizens that often prompt unending cycles of debt – is soon to see some local regulation. City Council member Bill Spelman has posted two items on council’s August 18 draft agenda that locally regulate the lassiez-faire industry.
The resolutions, posted to council’s draft agenda, tackle the issue on two fronts. One addresses land use and zoning for the businesses; as of this writing, back-up information isn’t posted, but according to a press release from Spelman’s office, it will “restrict new payday lending institutions from locating in certain neighborhoods, near major thoroughfares, or within close proximity to other payday lending institutions or residential areas.” Chris Riley and Mike Martinez are signed on as co-sponsors.
The second resolution, as described, “will require payday lenders to register with the City of Austin, collect and maintain data on its operations, cap the maximum amount of a loan, and restrict the number of times a consumer can refinance a loan.” The posting description of the item also notes a $500 penalty for each offense. Mayor Pro Tem Sheryl Cole and Laura Morrison are names as co-sponsors on this item (so there’s five votes right there).
The 82nd Legislature recently passed payday loan regulation, over some objections the bill didn’t go far enough. In the press release, Spelman calls their action “an important first step,” adding “Now it’s up to the City Council to reach out as far as it can to help Austin residents trapped under a viciously deep and unfair pile of debt.” Spelman also notes the zoning item is modeled after similar resolutions recently adopted in several Texas cities, and that his office worked with Dallas City Council Member Jerry R. Allen, who introduced a similar measure.
“This isn’t a concern of the left or the right; it’s a human concern,” Spelman writes. “Fifteen states and the District of Colombia have implemented payday lending rate caps around 36% APR. Cities like Dallas, Richardson, and San Antonio are initiating local action against these small dollar lenders. Now it’s time for Austin to step up and help curb the burden unfair payday lending practices have on our residents and our community.”