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Jo Clifton persuasive men around the Capitol.” Other heavyweight Austin lobbyists hired out to TCFA include attorney Robert Duke and former LBJ aide George Christian. Associates Corporation of North America and American Finance Management have their own lobbyists in town, though they are also represented by TCFA. With big banks and savings and loan associations also making small consumer loans now, their lobbyists are lined up with the rest of the industry to push interest rates higher. Consumer finance is complex and statistical, a difficult subject to master, and a bore to most members of the Legislature. It all makes for fertile lobbying ground, and the likes of Pendleton, Duke, and Christian are ready to till it. The lenders’ lobby is a helpful bunch, publishing and delivering to legislators an endless round of information broadsides and snappy booklets that lay out the facts of consumer credit and the hardships faced by the industry in Texas. This session, the major tack taken by the finance company lobbyists is a rather affecting poverty plea”The very exis tence of this substantial industry is at stake,” TCFA asserts in a November mailing to legislators. The problem, it seems, is that the companies are simply not earning enough for their troubles, and that’s why they are forced to come to Austin to boost rates. “We are attempting to counter emotional arguments with facts,” TCFA explains. What are some of these facts? The lobbyists say their clients can’t compete for loan capital in a national money market where the prime interest rate has ranged from 5.75 percent to 12 percent. What’s worse, they say, is that lender profits are down to about 1 percent of their investment. Industry spokesmen say the number of loans made in Texas is down from 911,201 in 1968 to just over 600,000 in 1975. This in turn has led to the cancellation of 159 4 The Texas Observer loan company licenses between January 1, 1975, and July 1, 1976. \(In truth, most of these “cancellations” are internal consolidation of loan offices, and firms boast of the efficiencies obtained when But a glance at 1976 profit figures published by Business Week magazine shows that the giant lenders have been doing quite well. Some of the large firms report the following investment returns: BankAmerica 15.8 percent Citicorp \(Nationwide 15.0 percent Wachovia \(American 11.6 percent 15.8 percent Simmons Co. Ford Motor Co. Credithrift Financial Inc. 7.6 percent TransAmerica Corp. 13.3 percent USLIFE Corp. 17.0 percent Gulf & Western \(Associates Further evidence that things are not as bad as the lobbyists would have the Legislature believe is found in the corporate reports of the loan industry itself. The following comes from the 1975 annual report of the Commercial Credit Co., a member company of the TCFA lobby and a property of Control Date Corp.: “The year’s most significant bright spot was the performance of our American and Canadian consultant and business finance subsidiaries, which in recent years have produced most of our earnings.” The good news at Commercial is by no means a fluke. They have lots of company. Witness the success of the Associates Corp. of North America, a subsidiary of Gulf & Western and another member of TCFA: “Operating results of the financing business improved during fiscal 1976. One factor was the reduced cost of funds. Interest rates on borrowing averaged 6.8 percent during fiscal 1976, down from 7.6 percent in the previous year.” And despite the poormouthing that Associates Corp. might give legislators, the firm thought enough of the Texas business climate to have recently moved a number of its administrative offices to Dallas from South Bend, Indiana. A direct rebuff to the loan lobby’s claim that Texas is not a comfortable place for finance companies to do business turns up in the literature of Transamerica Corp., the parent firm of Pacific Finance Loans, yet another member of the Texas loan lobby. Transamerica told its stockholders of a coming effort to “concentrate our marketing efforts and future growth in geographic areas where we have a significant market position. Major areas for this concentration will be the Pacific Coast and the Southwest.” What the loan companies want from this legislature has little to do with any legitimate need; rather, their shopping list is a cynical product of their sense that they have the power to get whatever they please. Well, what do they want? First, a doubling of the present ceiling on small loans, from $2,500 to $5,000. \(It is reported that they hope to tie the ceiling to the consumer price index through provisions of an “escalator clause,” but Pendleton says the industry may back would like an additional category of allow a new add-on interest charge of $12 per $100 borrowed. Success for the companies would guarantee their enrichment at the expense of average families who have no recourse but to take their loan business to these institutions. Patman says the bill expected from the loan firms would affect one out of every five Texans and would prove “grossly unfair” to small borrowers in the state. The industry bill is expected to be introduced shortly, and the lobbying effort for it promises to be vigorous. Patman again will lead the opposition, but he admits it will not be easy to win. The Ganado senator says his chief weapon in defeating the rate hikes will be roundthe-clock work to get the issue before the public: “The loan boys don’t want too much known about the bill. It can’t stand the light of day.” A consumer advocate watching the progress of the bill said that this is comparable to the infamous effort in 1969 to impose a bread tax on Texans. “The way legislators vote on the loan industry bill,” he said, “will be one of their most telling acts in this session.” Paul Sweeney is a freelance writer and former reporter for The Corpus Christi Caller.