We have consistently articulated our desire for pay day lending reform in committees, press conferences, and legislative meetings throughout this legislative session.  Our position has been clear, calling on the legislature to:

• Close the loophole in state law that allows payday, auto title, and other consumer loans to carry annual percentage rates upwards of 500%;
• Provide a level playing field by requiring that all lenders and brokers of payday, auto title, or other consumer loans be licensed and comply with the same standards and consumer protection laws of licensed lenders under Chapter 342 of the Texas Finance Code; and
• Create a system to collect consumer loan data from lenders and brokers of consumer loans to ensure that these businesses engage in fiscally sound lending that supports the well being of our communities.

Although the quest for equitable profit is acceptable in economic and financial activity, recourse to usury is to be morally condemned. Forcing poor families to pay 500% interest on short-term loans is wrong, and it is our view that there is not legislation moving forward that will stop this practice.

We appreciate the hard work of Senators Davis and Carona, and Representatives Truitt and Craddick to address this issue and work with stakeholders to achieve compromise.

SB 1862 and HB 2592, HB 2593, and HB 2594 will not end 500% interest lending in Texas, and this is cause for deep concern.  The Bishops cannot offer their support of these bills due to the lack of a cap on interest rates and fees. The exemption from usury laws and the prohibition of the Finance Commission setting rates are particularly troubling.  Despite that, we did want to express our appreciation that the bills offer new protections for consumers from the endless cycle of debt caused by these loans, create a licensing process similar to chapter 342, include oversight from the Office of Consumer Credit Commissioner, and include data collection.  Based on these protections, we are withdrawing our opposition of HB 2592, HB 2593, and HB 2594.  If these bills pass, reasonable rate and fee caps and meaningful enforcement must be addressed in the future.