The Austin City Council, with the support of the Catholic Diocese of Austin, unanimously approved two ordinances limiting the ability of "payday" lenders to charge exorbitant interest rates and transaction fees to financially struggling families.
Payday lenders in Texas are frequently designated as Credit Service Organizations, a category of lender which state lawmakers made possible some years ago to help individuals repair poor credit ratings. As CSOs payday lenders have used the designation as a means to skirt the state regulations and usury limits to which banks and credit unions are commonly subject. In some cases, the CSOs impose annual percentage rates of interest upwards of 500 percent and add processing fees each time the loan is rolled over.
Barbara Budde testifies on behalf of the Diocese of Austin at an Austin City Council meeting on payday lending regulation, August 18, 2011.
The city of Austin ordinance seeks to discourage usury practices by requiring payday lenders to register with the City, to supply reporting data, to cap the maximum loan amount, and to restrict the number of times a payday loan can be refinanced. A second ordinance restricts payday lenders from locating near one another, major traffic intersections, and certain neighborhoods and residential areas.
Austin's city council's unanimous vote follows a concerted effort during the recent 82nd Texas Legislative Session by the Texas Catholic Conference and other consumer and fair lending organizations to reform payday lending practices and strengthen consumer protection. One of the strongest voices on the issue was Bishop Joe Vásquez of the Diocese of Austin, who testified against usury and exploitation of people.
“Although the quest for equitable profit is acceptable in economic and financial activity, recourse to usury is to be morally condemned. . .The extreme interest and fees charged by payday lenders create a painful cycle of dependence that traps financially vulnerable families throughout our state. It is time to end that cycle and offer families protection from this abuse,” Bishop Vásquez told the Senate Committee on Business and Commerce this past February.
You can view Bishop Vásquez’s full payday lending testimony on our web site here.
A video of Austin Diocese' Social Concerns Director, Barbara Budde's, testimony in support of the Austin ordinance is available here.
You can learn more about the TCC position on payday lending via our policy paper here and our payday lending resource page here.
Our Mission The primary purpose of the Conference is to encourage and foster cooperation and communication among the dioceses and the ministries of the Catholic Church of Texas. A major function of the Conference is to be the public policy arm of the Conference's Board of Directors, the bishops of Texas, before the Texas legislature, the Texas delegation in Congress, and state agencies. The public policy issues addressed by the Conference include institutional concerns of the Catholic Church as well as issues related to Catholic moral and social teachings. Learn more about us.
