Nearly two weeks ago, Mayor Parker announced an ambitious plan to regulate Payday lenders. The proposed ordinance, which was largely crafted by City Attorney David Feldman, was modeled after other municipal ordinances currently in place throughout the State, including in Austin, Dallas, El Paso and San Antonio. The ordinance requires, among other provisions, the
loan sharks usurers lenders register with the city and provide easy to understand, concise contracts. Additionally, certain interest rates are capped and predatory tricks are forbidden. The ordinance immediately received somewhat harsh pushback from the business community.
Since the State of Texas does not have uniform regulations on these stores, a legitimate concern exists that the passage of the regulation will simply drive the institutions en masse to just outside the City limits. Accordingly, the usurious and predatory tactics will persist, but the City of Houston would lose the tax base. Such a solution would not work for anyone, and is similar to the rationale I have used in the past to discourage municipalities or even smaller States from unilaterally raising the minimum wage too far off the national base value.
Anyways, as promised, Mayor Parker officially presented this ordinance to the City Council this morning, with a tentative vote planned for next Tuesday. Today, a fair share of City Councilmember expressed strong reservations with the measure while many more were quite supportive.
Perhaps the most vocal opponent of this regulation was Councilmember Dave Martin, the conservative who represents Kingwood and Clear Lake. Councilmember Martin, as your might recall, was the one who first threw cold water on the Wage Theft regulation. Today, he lamented the Payday lending reform as “looking for a solution where there is no problem.”
Meanwhile, Councilmember C.O. Bradford blasted the measure as something that should be solved by personal responsibility, trying to pass off the duty to the borrower. I have to say that I had expected better out of Bradford. Also in opposition was Jerry Davis, as well as Helena Brown (who opposes just about everything).
Perhaps the biggest surprise was that Councilmember James Rodriguez also appeared hostile to the regulations. Given that District I is one of the most vulnerable districts to such usury, it really caught my eye that Rodriguez would take such a position. One may recall that Rodriguez’s close friend and predecessor on the Council, Carol Alvarado, when she ran for the State Senate, was heavily underwritten by the payday lenders. A little cursory research reveals that these same benefactors are supporting Rodriguez’s hand-picked successor, Graciana Garces, in her bid to succeed Rodriguez on the Council. I contacted the Garces campaign and was told that she has not made up her mind on the measure since “she has not studied it.” I find this absurd in no small part, mainly because the ordinance is nearly identical to those passed in other Cities; we have known for a while what it looks like.
In stark contrast, I have already received confirmation that her opponent in the District I runoff, Robert Gallegos, supports the ordinance.
The ordinance was tabled for one week, when a vote for ostensibly be held. By Mike Morris’ calculations, the Mayor needs one more vote in favor with 6 undecided and 4 opposed (I count 5 opposed: Bradford, Brown, Davis, Martin & Rodriguez). Needless to say, this debate has not necessarily been along partisan lines.