Democrat Tanks Bill Strengthening Consumer Loan Regulation
Last session, legislators took sides in a marathon brawl over payday lending reform. But after those reforms died, there seemed to be little hope for action on the issue this year. As the 84th Legislature unfurled, though, a few small bills advanced. One of them, Senate Bill 1282, was hailed by some reformers as a modest but helpful augmentation of the ability of the Office of Consumer Credit Commissioner to regulate short-term lenders, including payday lenders. On Wednesday, it was killed by state Rep. Marisa Márquez (D-El Paso).
It’s a move one reformer who supported the bill called “disrespectful.” Márquez says her distaste for the bill didn’t necessarily have to do with the bill’s provisions, but rather the lack of opportunity lawmakers had to change it—something advocates of the bill had been trying to avoid. “With an issue this important, there should have been an opportunity for the rest of us to participate in it,” said Márquez.
The legislation—authored by state Sen. Kevin Eltife (R-Tyler) and carried in the House by state Rep. Tan Parker (R-Flower Mound)—was a relatively simple “clean-up” bill that would have clarified the powers of the little-known Office of Consumer Credit Commissioner, or OCCC, the state agency that licenses and regulates lenders. The agency had been asking for the bill for several sessions, and reform groups had been helping to drag it to the finish line.
Bee Moorhead, the executive director of Texas Impact, an interfaith advocacy group, said the bill was “not radical reform legislation,” but a series of needed technical changes. Among other things, the bill would have added references to the newly-created Consumer Financial Protection Bureau to state law. And it would have given the OCCC clear authority to regulate lawsuit lenders, who loan cash to plaintiffs awaiting judgements or settlements in civil lawsuits. “Regulating this relatively new product early would help Texas avoid future conflicts,” Moorhead said, “like those that have occurred in other markets, such as payday lending.”
SB 1282 had already traveled a rocky road through the session. Some, including Republicans like state Rep. Tom Craddick (R-Midland), wanted to add other, stronger reform measures as amendments to the bill. But progress slowed, and Craddick never got the chance. That’s a familiar story for legislation reforming consumer loans, such as payday, auto title and property tax loans—only simple and carefully negotiated bills can make it through the process, and advocates are divided between those who want to push for more and those who are happy with incremental reform.
But SB 1282 wound up on the Local & Consent calendar on Wednesday, giving the House one more chance to send it to the governor’s desk. That’s when Márquez knocked it off the calendar—a procedural move that effectively killed it.
“There was concern that language in there could promote cash lending. So it was something that we probably should have debated on the House floor,” said Márquez. “I’m sorry it was there so late, but it wasn’t something we could just pass without debate.”
But opening the bill up to amendments could have tanked it by making the legislation unpalatable to lenders—something that has happened to other payday lending bills in the past. And the result of the bill’s death is simply that state regulators will go for the next two years without the tools they say they need to do their job.
Moorhead, who denies the bill would have “promote[d] cash lending,” says the bill was a simple matter of upholding good government. “It seems irresponsible for legislators to talk so much about the need for efficiency and accountability at agencies, and then to allow routine agency legislation to become collateral in political showdowns.” She added: “It’s a small moment in a legislative session that has been full of big moments, but that should not be an excuse to let it go by unnoticed.”
Márquez, though, puts the blame back on the reformers. If they wanted the bill to pass, she says, “they probably should have involved more of us in the conversation about it.”