Houston City Council PASSES Payday Lending Reforms

Today Houston saw yet another huge ordinance brought forward, in what many are referring to as Mayor Parker’s post-election “Progressive cram”. Like college kids studying for the most vociferous of finals, the Houston City Council passed major regulations on Credit Access Businesses, or issuers of Payday and Auto Title loans. The ordinance proved to be one of the year’s most contentious issues, and CM Christie even attempted a last-minute amendment that would’ve essentially gutted the whole ordinance. It would scrap the requirement to pay a portion of the principal with each payment, and increase the amount of income used to calculate the loan. These issues form the purpose for the ordinance because it gives borrowers a pathway to break the cycle of debt for the loans. The amendment failed 11 votes to 6.

After much discussion, the Payday Lending ordinance passed by a vote of 15 to 2, with only outgoing Council Members Brown and Rodriguez voting against it. This brings Houston in line with other major cities across Texas have already passed payday reforms. But as Texas’ largest city, Houston’s passage will allow the reforms to have a significant impact.

The heart of the new regulations is as follows…

a) Creation of a new database that catalogs (and presumably monitors) all credit access businesses.

b) Loan amount cannot exceed 20 percent of gross monthly income for a payday loan. For an auto title loan, the amount borrowed must be the lesser of either 3 percent of the borrowers annual income, or 70 percent of the automobile retail value.

c) Loans must be paid off in a maximum of 4 installments, and each payment must reduce the loan principle by at least 25 percent.

d) Distribution of consumer credit counseling materials to all borrowers who seek to renew their payday or auto title loan.

The ordinance joins prominent legislation to combat wage theft, and an executive order extending employee benefits to same-sex spouses… all enacted after Parker’s reelection on November 5th.

Direct from Mike Morris of the Houston Chronicle

“Something must be done; something should be done,” Councilman Andrew Burks said. “Our Legislature, they had the ball and dropped it. I don’t like this, but I have to vote for it because … this is the only thing on the table, and it does do something.”

Councilwoman Wanda Adams, who said her office has helped seniors get back cars that had been repossessed after they defaulted on title loans, praised the outcome.

“I’m so proud to know we are taking a stand in protecting our constituents throughout our community,” Adams said. “I think this is something right.”

Yet more evidence that Mayor Annise Parker’s final term promises to be an exciting one for Progressive Texans. It was also a fitting final meeting for Wanda Adams, one of the Mayor’s strongest allies, as she concludes her tenure at City Council. Payday lending reform was one of the last major issues she wanted to tackle as a Council Member. Adams moves on to the HISD Board of Trustees.

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