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The Source: Payday Lenders Go To Court In San Antonio

Paul Flahive, Texas Public Radio

Today the city of San Antonio takes two payday lenders to court for violating the ordinance it passed two years ago to regulate the industry " in an effort to reduce against abusive and predatory lending practices."

The ordinance includes limiting the percentage rate of the loan to the income of the lendee, limiting the number of rollovers a person can take and requiring the contract be written in a language the borrower can understand, among other things. 

Early this year several payday lender,s including Power Finance, RapidoDinero and others, sued the city disputing the city had the right to regulate them since they get their licenses to do business from the state. The city won, as they did in Dallas, which has a similar ordinance, and now cities across the state have been taking regulating this industry into their own hands.

As of June 25 of this year, 18 Texas cities had passed ordinances and Brownsville is expected to have something on the books next week, followed by Beaumont. 

The state, for its part, has failed to pass regulation to reign in the industry, which regularly has percentage rates in the triple digits, in 2011 and in 2013. The industry carries quite a bit of clout in Austin. Last year "The Source" spoke with the 2013 legislation's author Sen. John Carona, R-Dallas. 

"I really do worry two years from now whether or not this particular industry will have grown so politically powerful that it will have not only control of the legislature, which to some extent it does, but will also have complete control of state government here in Texas." - Sen. John Carona

State Rep. Gary Elkins, R-Houston, owns the payday lender Power Finance and has fought against regulations for years. Texas' "wild west" approach got the attention of former Daily Show correspondent, and now news-skewering host, John Oliver. The rant that followed went viral in social media.

The state's recalcitrance has led reform organizations to turn their efforts to cities, where they have had great success. One organization is the Texas Catholic Conference, who took their regulation education on the road, hosting listening sessions and giving local leaders the guidance they wanted to create municipal ordinances or to find alternative paths to lending. 

As a result, cities in Texas are leading the charge against predatory lending.

Now that San Antonio is court, we find out if these ordinances have the teeth to cut back on abusive loans.


  • Forrest Wilder, editor at the Texas Observer
  • Jennifer Allmon, associate director of the Texas Catholic Conference

*This is the first segment in the September 10 edition of The Source, which airs at 3 p.m. on KSTX 89.1 FM. Audio from this segment will be posted by 5:30 p.m.

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Paul Flahive can be reached at Paul@tpr.org and on Twitter at @paulflahive