The only way for payday lenders to avoid an ever-expanding patchwork of local lending regulations in cities across the state, state Rep. Mike Villarreal, D-San Antonio, warned at a press conference on Wednesday, is with the passage of a new law that would create a statewide regulatory framework.
As House deadlines threaten to scuttle Senate Bill 1247, by state Sen. John Carona, R-Dallas, Villarreal, the bill's House sponsor, and other lawmakers said that if the proposed statewide regulations fail, they will encourage more local governments to join cities like San Antonio, El Paso and Austin in adopting ordinances that control lending practices.
SB 1247 offers the industry relief from the existing variety of local regulatory ordinances, in exchange for statewide regulations that advocates say would help curb the worst excesses of the short-term lending industry.
The bill has seen a number of major changes since its introduction. Consumer protection provisions were weakened coming out of Senate committee and then dramatically strengthened on the Senate floor before heading to the House for consideration.
Now, those protections may be weakened again before passing out of the House Committee on Investments and Financial services, whose members have expressed serious reservations about the bill. But reducing the protections could put the measure on uncertain footing when it returns to the Senate for approval.
After the conference, state Sens. Rodney Ellis, D-Houston, and Wendy Davis, D-Fort Worth, who have both pushed for stronger consumer protections against predatory lending practices, reiterated that if the bill was weakened too much in the House, it wouldn’t pass the Senate.
Ellis and Davis said that Carona promised that the final version of the bill would include six provisions that supporters say are vital to protecting consumers. Last week’s House committee substitute lacked two of those.
Villarreal, who is chairman of the House committee, said at the press conference that he would continue advocating for payday lending reform after the session ends – traveling to cities around Texas to push for increased municipal regulation. He said that he was currently the only legislator on the six-member committee who was inclined to vote favorably on the bill.
Ellis and Davis also vowed to encourage municipalities to pass local lending regulations. Houston is already in the process of considering such regulations, and Davis said she would encourage Fort Worth to do the same.
The press conference might have been an attempt to remind the short-term lending industry that a compromise deal is the only way to circumvent local regulations that lenders dislike. But it could also be an admission that chances of passing the measure are slim. Villarreal recently wrote as much on his Facebook page.
“After months of work on payday and auto title lending reform, it’s hard to accept that we may not have the votes to move forward with meaningful protections for consumers,” he said, adding that he was “still working to find a path forward.”
At the press conference, Villarreal said that he wouldn’t pass a weak bill.
“I’m not interested in putting my name on a paper tiger,” he said. “If we cannot pass a meaningful bill at the state level, then the cities need to be empowered and encouraged to pass ordinances.”