By Christie Post - email
LUBBOCK, TX (KCBD) – The City Council voted 7-0 on a non-binding resolution to call upon the Texas legislature to put tighter regulation on payday loans.
Like some other city councils around Texas, Lubbock will follow the lead. The council voted unanimously in favor of making a statement that would ask state lawmakers to restrict payday lenders to a responsible rate of return.
The proposed resolution says that the payday loan profession exploits customers.
Payday loans are intended to cover people until their next pay day, however, the city council members say the cash advance has out of this world interest rates.
"And the interest rates can be up to 500 percent per year. Those are pretty staggering interest rates. And many people might be able to pay the principle, but they can't pay the interest back," says Mayor Tom Martin, City of Lubbock.
The council now wants Lubbock to put pressure on the state legislature to make changes.
"This is an effort that's underway by the AARP to see if we can make a change in Austin one city at a time really to take what's really been high center," says Councilman Todd Klein, City of Lubbock District 3.
We did get a statement from the payday loan association, Consumer Service Alliance of Texas (CSAT) it reads:
Statement of the CONSUMER SERVICE ALLIANCE OF TEXAS
Lubbock City Council
January 27, 2011
AUSTIN, Texas (January 27, 2011) – Alex Vaughn, president of the Consumer Service Alliance of Texas (CSAT), today issued the following statement in response to today's vote by the Lubbock City Council:
Credit Service Organizations that facilitate small short-term loans in Texas are not opposed to future discussions about additional oversight.
However, we strongly oppose any measure that effectively eliminates consumer access to short-term credit. Our members are taking a leadership role working with legislators, foundations and legitimate groups representing consumers to protect consumer financial choices.
We anticipate further conversations will continue over the coming months. CSAT members look forward to working with lawmakers on reforms that will continue to protect Texas consumers and the jobs of over 7,800 industry employees working in retail locations across the state that pay more than $18.5 million in taxes to the state and local governments.
The resolution from City Council will be sent to the governor and Lawmakers who represent the Lubbock area in Austin. The council hopes their effort will be put on the books for this legislative session.
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