Tuesday, January 07, 2014

Abbott escorted the loansharks into Texas in '06

Matt Angle waves to the media and says, "Over here, folks. The ballgame has moved back onto the playing field".

Greg Abbott’s office issued the key document that has allowed payday lenders to operate outside of Texas usury laws and exploit Texans across our state. A letter issued from the office of the Attorney General carefully lays out that payday lenders in Texas can take advantage of a loophole used by credit service organizations to avoid Texas laws preventing unscrupulous lending. It is essentially a “how-to guide” for payday lenders to expand and grow their predatory lending businesses.

Payday lenders had been nervous about expanding their operations in Texas, but Abbott’s letter gave them the go-ahead they needed. The respected financial industry publication American Banker reported how payday lender Ace reacted to the Abbott letter:

"The Irving, Tex., company originally saw too much legal risk in the CSO setup, in which payday specialists can collect as much as 20% in fees for arranging a short-term loan from a third-party lender. But this month Texas' attorney general, Greg Abbott, sent a letter to the state's Office of Consumer Credit Commissioner saying that CSOs are permissible. So on an earnings conference call last week Ace said it will begin brokering loans as a credit service organization sometime in the next two quarters." (American Banker, February 1, 2006)

The El Paso Times, once more, shows the Hearst affiliates locally how to cover the news.

State Sen. Wendy Davis is highlighting a 2006 letter by the office of Attorney General Greg Abbott that says there are no limits to the fees that payday lenders can charge.

Davis said the letter, which was written in a response to an inquiry by former state Sen. Eliot Shapleigh of El Paso, set the stage for an explosion of high-interest lending that critics say exploits the poor.


Abbott's campaign did not respond to a request for comment on Monday. It also has not responded when asked for more than a week whether Abbott believes the Texas payday lending industry needs to be reformed.

This is also top-notch explanatory journalism.

The concept of usury -- unconscionably high interest rates -- goes at least as far back as the Old Testament.

It's also part of the Texas Constitution, which says that in the absence of legislation, interest rates in the state are limited to 10 percent a year.

Lenders that are licensed and regulated under Texas law face caps of their own. Commercial loans in most instances can't exceed 18 percent except when the loan is greater than $250,000, when they can't exceed 28 percent.

Auto loans can't exceed 27 percent. Short-term loans by licensed lenders can't exceed 150 percent and pawn loans can't exceed 240 percent.

But the letter by the attorney general that was released Monday said fees associated with payday and title loans have no limits.

So what Abbott did not only violates the Texas Constitution... but the Bible, too.  That reality is going to rock his Christian army's world.

Please, go read the whole thing.  So when you see former conservative bloggers who consider themselves devout Catholics taking up the cause of the poor, picked-on payday lenders in the comments of what's left of the sagging Houston conservative blogosphere... you know that desperation has really set it.

Now if you want the straight story, no spin, then read Wayne Slater.  If Abbott and company really wanted to say something truthful and still damaging about Davis in this matter, then they would point out that she's taken money from payday lenders also.  About one-tenth the amount he has.

Bay Area Houston skewers it again, much to the cringing rage of other sad-sack Christian conservative blogging Republicans (the small caucus of those without a shred of common sense).

1 comment:

Greg said...

I'm curious -- what legislation did Crazy Wendy introduce to shut down these operations?

Oh, that's right -- none.

Guess the Breakdown Queen wasn't concerned enough about the matter to make it an issue -- until it became politically expedient to talk about it AFTER her last session in the legislature was over.

But then again, that's what we call SHOWBOATING -- and apparently Wendy thinks she is trying out for the role of Magnolia Hawks rather than running for Governor.