Press Release

For Immediate Release May 3, 2005
Contacts: Celia Hagert (512) 320-0222 Luke Metzger (512) 479-7287

Payday Loan Bill Poses a ‘Very Real Security Threat’ to Texas Families
** Legislators, Coalition call for defeat of House Bill 846 **

AUSTIN// A diverse coalition of legislators and military, religious, and civil rights leaders today called on members of the House of Representatives to defend the financial security of Texas families and defeat House Bill 846 -- a bill that would perpetuate the practice of payday lending in Texas.

“There is a very real security threat to Texas families today – an economic security threat,” said Senator Eliot Shapleigh (D-El Paso). “House Bill 846 would legalize loan sharking in our state and open the door to financial ruin for hard-working Texans.”

HB 846, by Rep. Dan Flynn is backed by the payday loan industry and perpetuates unaffordable loans for desperate, cash-strapped Texas families, workers, and military personnel. That legislation is slated for consideration before the entire House on Thursday.

Payday loans are high interest loans that some Texans rely on when they have trouble paying their bills between paychecks. Payday lenders can charge interest rates, which can reach as high as 800 percent.

“Of all the ways our state fails to provide justice for the least of God’s children, allowing unscrupulous profiteers to exploit the working poor is surely one of the most egregious,” said Bee Moorhead, Director of Texas Impact.

Rep. Flynn’s bill would, under the guise of “consumer protections” actually open up the availability of payday loans. Among the more egregious provisions of HB 846 are an increase in the fee to $15 per $100 borrowed, the ability of payday lenders to “import” lone shark-level interest rates from institutions in states with far looser usury laws than Texas, and no real protections against the constant renewal, or ‘flipping’, of the loans which lock consumers in a cycle of debt.
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“HB 846 legalizes these predatory, high cost loans that are trapping military and other borrowers in a devastating cycle of debt,” said Art Bailey, Director of the Navy Marine Corps Relief Society’s Corpus Christi office. “Even with the protections for military personnel, this bill will do more harm than good for the men and women of the U.S. Armed Forces.”

Sen. Shapleigh, Chief Bailey, and Ms. Moorhead joined other participants on the North Steps of the Capitol in Austin to rally in favor of financial security and against HB 846. The Navy Marine Corps Relief Society and Texas Impact are part of a diverse coalition -- known as the Gone To Texas Coalition -- devoted to preserving Texans’ financial well-being. Other coalition members include: the Military Officers Association of America, the Center for Public Policy Priorities, the AARP, the NAACP, the Texas Public Interest Research Group, and People for the American Way.

“Rep. Dan Flynn’s HB 846 is industry-backed legislation that claims to regulate payday lenders,” said Celia Hagert of the Center for Public Policy Priorities. “In truth, his bill would drastically erode the financial well being of thousands of Texas families by exposing them to high fees and exorbitant interest rates.”

“Tomorrow the House will decide whether Texas will continue its historic stance against usury or whether we will surrender to the loan sharks fleecing Texas families down on their luck,” said Luke Metzger, TexPIRG Advocate.

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