A measure that sought to regulate the payday lending and securities industry in Abilene died 3-3 during Thursday’s Abilene city council meeting.
The council offered multiple opportunities for public input on the issue. Nearly 40 people spoke on Thursday, offering a wide variety of perspectives.
The measure would have limited the amount that people applying for such loans could borrow and would have restricted the time limit for repayment of the loans.
Many of those who spoke Thursday said the payday lending and property title industries are preying on people who find themselves in dire financial straits and who are often unable to repay high-interest loans.
Those speaking in favor of the industry, including customers, have argued that companies provide a valuable service, giving people a choice or a “second chance” to help them through difficult financial times.
Several members of the Abilene faith community spoke out in favor of the ordinance, although some board members challenged them to do better to find ways to help those in need, including launching the idea of churches operating their own low interest loan businesses.
Ultimately, a mid-afternoon vote ended the long debate, with council members Shane Price, Bruce Kreitler and Steve Savage casting dissenting votes, and Mayor Norm Archibald and council members Anthony Williams and Kyle McAlister voting for the ordinance.
McAlister said he was “tired of waiting” for state and federal governments to regulate many matters, and said he believed an ordinance was the best option for residents of Abilene.
Archibald said he wished the state and federal government had already addressed the issue.
But an ordinance, he argued, would help “protect the people who, in my opinion, have fallen into the trap of excessive debt and degradation of (quality of) life.”
Williams said he also believes the issue should be dealt with at the state level.
He said the payday loan issue “affects our community the least,” adding that while those who borrow money from banks pay an average interest rate of 18%, “these companies (loan ) charge more than 400% “.
Although payday and title loan companies have higher default rates due to the ease of obtaining a loan, “not much is good” about paying this type of interest, a- he declared.
Savage countered that the city was not “responsible for restricting more things.”
“We’re just supposed to do what’s right, (and) I don’t think that restriction is right,” he said, saying he didn’t think it was possible to “say you’re conservative or pro- business or want to reduce the size of government and still want to support more regulations. “
Savage said the lack of well-paying jobs in Abilene, partially created, in his opinion, by previous local regulations that had stifled small businesses, was one of the reasons people were seeking help.
He has said repeatedly that there was nothing in the ordinance to prevent people from switching from lender to lender, getting “five or six” loans along the way, even though the potential restrictions had been. imposed.
Kreitler said he believed the payday loan issue was emotionally charged and a symptom of a larger problem, which would not be addressed by restrictions.
“I think emotions and good intentions are a terrible way to make regulations and laws,” he said. “I also think it is – if not over-legal by municipal government, probably further than what municipal government should be going.”
Price said he sees an opportunity to harness the power of the community to provide a non-profit service with lower rates.
“If you offer 20-30% interest and they charge 400% interest, they’re going to come and use that (service),” he said, noting that even though the churches didn’t necessarily need to intervene role, they could help with funding and personnel.
Price also said it was fiscally irresponsible to pass an order that would not be enforced due to potential lawsuits or challenged in court, demanding that taxpayers’ money be spent defending it through the Office of the city attorney.
Zach Snyder, supporter of the ordinance, said after the meeting that he was “very disappointed” with the results
“I believe there are people in Abilene who will continue to suffer and be slaves to the lender due to the inability of the city council to pass this measure,” Snyder said, adding that to him it seemed like some board members “didn’t really understand the plight of the people at the bottom of our society.
Michael Brown, owner of Star of Texas Financial Solutions and president of the Texas Organization of Financial Service Centers, said the order “was not the council’s choice”, adding that payment amounts would increase and people should. pay back more money. in less time.
“Businesses are going to close, people are going to lose their jobs,” Brown said. “Demand will stay where it always has been. People are going to be inconvenienced. “
Many would seek out loan sources outside of town, he said, while others would just go online and grab those sources.
“We are not putting pressure on you to solve industry problems,” he said. “I would love to work with the board or any other leader of Abilene to help invest in financial literacy programs.”
Brown said after the meeting that the Texas Financial Education Endowment grants are funded by the credit access companies.
The program is designed to support and promote the financial capability, education and responsibility of Texans, according to the TFEE website.