Brownwood Poor Getting The Squeeze ?

EDITORIAL
Squeezing more from the poor
EDITORIAL BOARD
Monday, April 25, 2005

Texas is fast becoming the usury capital of America, with solid legislative support for a law allowing short-term lenders to charge up to 390 percent annual interest on so-called payday loans.
Most people who need a quick loan and have to rely on their next paycheck to repay it are in a weak financial position, and these usurious interest rates give lenders the right to prey on them. No one would stand for the Legislature raising home loan interest rates to 390 percent, but since payday loans target the poor, too many lawmakers don't care.
Plus, it's good for business. Wall Street is apparently watching the Texas Legislature to see if the lawmakers can revive the sagging payday loan industry by letting it charge exorbitant interest rates.
Even worse, the bill approved by a House committee last week will give Texas lenders a way out of more restrictive federal usury laws. Payday loans have been limited by the Federal Deposit Insurance Corp., but House Bill 846, by state Rep. Dan Flynn, R-Van, would allow Texas lenders to skirt the federal restrictions.
The FDIC guidelines limit short-term loans to six a year per customer. The industry trade group says customers average eight loans a year, and if Texas lenders can make their own loans without going through banks in other states, they don't have to abide by the FDIC guidelines.
According to an article last week in the American-Statesman's Business section, the payday industry is spending hundreds of thousands of dollars on lobbyists to get favorable legislation passed. It must be working. Flynn's bill sailed through the committee process on a 5-1 vote.
As one opponent of the payday loan bill observed, it allows companies to charge interest rates that would make a loan shark blush. By rejecting this legislation, lawmakers can stand up for their constituents instead of turning loan sharks loose upon them.
source: http://www.statesman.com/opinion/content/editorial/04/25usury_edit.html