More Disclosure for Payday Lenders

The Texas House took a step toward tougher regulation of payday lenders Wednesday, tentatively approving a bill that would require lenders to make more detailed disclosures to their borrowers.

The House first removed some of the proposed disclosures, narrowly approving an amendment by Rep. Gary Elkins, a Houston Republican who started his argument with a disclosure of his own: He's in the business himself and isn't hospitable to more government regulation.

Elkins said the additional disclosures would "overload" the consumers. "I don't want to be in the position where it's impossible for me to comply with the law," he said.

"We are so heavily regulated that he customers walk out with 20 pages of legal disclosures now … as it's written, I could not comply with the requirements of this bill," he added.

Rep. Vicki Truitt, R-Southlake, has been negotiating for months with payday lenders and with groups that want to leash those lenders, even bringing in lawyers to mediate the talks. She's got three bills, two of them on Wednesday's agenda and the third on Thursday's.

She started by saying she's not trying to ruin the industry. "Clearly there is a market for these services," she said. "It is not my desire to put any desirable operators out of business."

And, she said, she wasn't willing to take many changes, since previous efforts to regulate payday loans have been picked to pieces or, as she put it, "heavily amended, attacked and eventually killed."

She said she wants to knock off "predators" without harming "legitimate operators" in the payday loan business. But Elkins and others bristled at the idea of more regulation.

"I do not think the consumer credit commissioner is the proper authority to regulate this industry," Elkins said. He said that consumers do what they do "in their own economic self-interest" and don't need more layers of protection.

A move to kill his amendment failed 75-64. After it was added to the bill, he said he'd vote for it.

"I don't like government regulation. … All they are is mostly an impediment to business," Elkins said. "These disclosures, folks, they're already made."

Truitt's second bill on the subject would allow the state to license and oversee payday and auto title lenders and would also impose fees on the businesses to pay for the regulation. It got sidelined on a technical point but could come up later.