Lending industry pushes for statewide regulation - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

Lending industry pushes for statewide regulation

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Amarillo, TX -- Business and government in Texas are traditionally at odds - the Texas mentality is usually the less government oversight, the better.  But the lending industry is pushing the legislature for more regulation.

Payday and auto title loans are meant as short-term solutions to help someone through a financial rough patch.  But both lenders and their critics say the status quo has to change for the good of the industry and consumers.

Currently, there are about 4500 short-term loan businesses in Texas, and their clientele tends to be largely poor.  And many customers take out multiple loans to pay off other loans, which perpetuates a cycle of poverty and debt and opens the door to predatory lending practices.

"I have no doubt that industry has really helped folks out," says Matt Adams, an investment analyst at Money Methods in Amarillo. "There's been situations to where they have really been a lifesaver, so to speak, to somebody who's really in desperate need.  However, there's a fine line between providing that need and taking advantage of somebody in a situation like that."

The Consumer Service Alliance of Texas is an industry group that pushes for rules and regulations that benefit business while protecting consumers.  This legislative session, CSAT is hoping lawmakers will make some key changes, as CSAT spokesman Rob Norcroff explains,

"What we've done in the best practices and other things that are being discussed by the legislators are limits on the number of times you can refinance a loan, no fees, no costs,  extended payment plans, and mandatory principal reductions on other types of loans.  The goal is to put someone on the path to repayment in a time certain, regardless of the type of loan obtained."

Payday lending is actually banned in twelve states, and some states have caps on the maximum loan amount - Texas does not. 

If you'd like to learn more about the lending industry or its ongoing efforts in Austin, follow the links attached to this story.