Gerald Britt’s column on payday loans gets several facts wrong, and the solutions he offers would eliminate short-term credit options in Texas, forcing borrowers to more expensive options they’ve already rejected.

He claims SB1247 fails to address three issues:

“Cycle of debt”: There is no cycle of debt.  The OCCC reports that the most frequent number of loan renewals is 1, the average is 2, and the industry’s best practices limit them to 4.

“Provide 3rd Party Lending Transparency” – Loan contracts already provide the lender’s information.

“Offer meaningful protection to low-income borrowers” –  Loan documents are already provided with grade-school level documentation, borrowers are limited to how much they can borrow, how many loans they can have, how often they can renew, and can request a payment plan.  What more does Britt want?

He deliberately uses emotionally-charged examples of borrowers who made poor choices, and chose lenders who were not members of the industry’s trade association.  He does not mention the 1.2 million Texans who choose these loans over all other credit options, and return to them because of their 90% satisfaction rate.  The Better Business Bureau only fielded 3,300 complaints last year, across the entire country.  As usual, however, the only person complaining about payday loans is a person who doesn’t use them.

As for his “solutions”, limiting loans to 10% of a borrower’s income will not provide enough for borrowers needs.  If you can’t borrow enough to pay the $300 mechanic’s bill when your car breaks down, I doubt Britt will be giving you a ride to work.

Finally, Britt claims the industry’s contributions prevents the legislature from passing a law that he likes.  He fails to mention that industry opponents also have deep pockets and have been lobbying the opposition.  Why is it that this fact never gets mentioned?

It’s obvious that the legislature believes that SB1247 is what’s best for borrowers.  Leave it be.

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