State Lawmakers Debate Payday Loan Company Regulation
FORT WORTH (CBSDFW.COM) – Some payday lenders say they will leave the state if new regulations are passed.
There are several proposed Senate bills that would put limits on interest rates and fees charged by the lenders.
Ace Cash Express President Jay Shipowitz says the change in regulation will cause problems for his business. “If this bill is passed we will be forced to shut our stores down in Texas. We’ll be forced to terminate those 1500 people and they will no longer have jobs here,” he claimed.
Ace Cash Express is based in Irving and has some 500 stores in the state. Shipowitz says his business couldn’t make money with the caps, as proposed.
Senator Wendy Davis, D-Fort Worth, the author of the bill, says she would be happy to work with Shipowitz to come up with limits that will keep him in business.
“If you are willing to sit down and have a legitimate conversation with me about what that number is,” she said. “But unless, and until, you do that my only alternative is to offer what I’m offering right now, which is to put you under the existing lending statue in the state of Texas, that all other lenders have to function under.”
In Texas, payday lenders aren’t actually ‘loan companies’, they operate as credit service organizations (CSOs) and don’t have to adhere to fee and interest caps under Texas Finance Code.
A mid-interest credit card has an annual percentage rate (APR) in the area of 15-percent. For those with a lower credit rating credit card interest rates average in the 25-percent range. In Texas, the rates charged by some payday lenders reach an APR of 500-percent.
According to the Texas Ethics Commission, Ace, and other companies like it, have given Texas officials more than $1.5 million in campaign contributions over the past ten years.