In almost every news story or report about Texas payday and auto title loan reform you hear consumer interest groups blame the defeat of legislation regulating the industry on “high-powered, moneyed lobbyists” for credit access businesses — or CABs.
On March 5, Sen. Rodney Ellis, D-Houston, and Reps. Craig Eiland, D-Galveston, and Mike Villarreal, D-San Antonio, repeated the allegation in a Galveston County Daily News op-ed. In the article, the lawmakers stated, “During the last legislative session, industry lobbyists blocked the reform bill we tried to pass.”
Never mind that this assertion is misleading, if not patently false. Never mind that Ellis, Eiland, Villarreal and the consumer interest groups they represent have been pushing legislation meant to drive the industry out of business during the past three Texas legislative sessions. Never mind that an aggressive and influential Houston trial lawyer — posing as the defender of a politically naive, modern-day “Davids” fighting an uphill battle against so-called CAB industry “Goliaths” — has been pulling strings behind the scenes to ensure the two sides never find a middle ground.
To be sure, payday and auto title lenders have been working tirelessly during the past five years to ward off legislation aimed at killing the industry, focusing instead on “compromise” measures that would bring about meaningful, reasonable and effective regulation of small, short-term loans, and end cycle of debt concerns, while preserving consumer access to small, short-term credit in Texas.
However, each time the opposing camps reach a tentative “compromise,” some of the special interest groups peel off and oppose the agreement. Unfortunately, some of the CABs join them. These special interest groups then criticize the “compromise” as an “industry” proposal in an attempt to defeat it.
During the 2013 Texas legislative session, the Senate Business and Commerce Committee chaired by Sen. John Carona, R-Dallas, overwhelmingly approved a bill to regulate payday and auto title loans. Texas Goodwill, the Center for Public Policy Priorities, Texas Impact and the CAB industry testified in favor of the “compromise.” The city of Houston also threw its support behind the measure.
Several days later, over industry objections, Democrats led by Sen. Wendy Davis, D-Fort Worth, and op-ed author Ellis — buoyed by powerful Houston trial lawyer Steve Mostyn and disingenuous special interest groups — defeated the compromise regulatory bill on the Senate floor.
Think about it for a moment. Every time the industry pushes for a compromise, some of the special interest groups immediately characterize that compromise as an “industry proposal” — and oppose it, hoping to push the industry further.
Such devious behavior on the part of special interests does nothing to help consumers, nor does it advance the debate over a problem that is desperately in need of a solution. It only serves to widen the rift between consumer groups, the industry and anyone else seeking to score political points.
The special interests have become particularly brazen in insisting that every city in Texas pass a Dallas-type ordinance to restrict small, short-term credit in their communities — one that duplicates financial data collection requirements, limits access to credit for Texas customers and restricts the terms under which loans may be repaid. They claim it is a litigation strategy. Actually, it has nothing whatsoever to do with lawsuits challenging the validity of the ordinances.
The fact is there is no legal theory that supports every city passing a local ordinance. It is a purely political argument designed to “thumb a nose” at the Texas Legislature — at the expense of Texas consumers.
Adam Burklund is field director for the Consumer Service Alliance of Texas, a trade association that represents the interests of consumers and Credit Access Businesses across the Lone Star State.