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Mauzy is in debt to Dallas’ Republic National Bank he owes Republic “about seventeen to eighteen thousand” in loans he took out “to keep afloat” after his divorce, but denies that his financial situation influenced him to throw in with Adams on the interest rate bill. Republic National spokesmen testified on the bill’s behalf last summer. Interviewed recently about his cosponsorship of the bill, Mauzy expressed mixed feelings about it. “I don’t like the bill,” he told the Observer. “If I had my own way there wouldn’t be any such thing as finance companies but that’s if I were reordering the world, and I’m not. We’re gonna have this industry, and all we can do is try and shape it.” But later he told Stewart Davis of The Dallas Morning News that he was worried about the possible flight of consumer credit companies from Texas. “Every study I’ve seen indicates if some remedial changes aren’t made, there will be nobody making these loans in Texas for those who cannot obtain conventional financing.” Big profits Though the finance companies say their Texas survival is at stake, there is much that seems to dispute the claim and it is not just that corporations like Associates are moving here. Eighty percent of the small loan business in Texas is controlled by large, prosperous out-of-state corporations, according to Senator Patman. And figures released by Sam Kelley show that of the largest 19 lending firms in the state, 14 turned profits last year. Big profits. Yet, because some companies are un Eighty percent of the small loan business in Texas is controlled by large out-ofstate corporations. profitable, the industry as a whole calls for higher rates. Indeed, the view of industry leaders is that the public owes them a living. “If the legislators are going to accept the responsibility for regulating an industry,” TCFA’s general counsel, Bob Duke, told The Dallas Times Herald early in February, “then they’ve got to accept the responsibility for the health of the industry.” There are, meanwhile, impressive figures that show the borrowers’ health is not very good. In 1975, the most recent year for which Kelley’s office has complete figures, Texans paid out more than $6 million in default charges charges of 5 percent of the monthly payment tacked on as fines. One in every six payments carried a penalty in 1975. The year before, one in every five payments bore a default charge. Last year, loan companies also raised more than $2 million from Texas borrowers in deferment charges, interest fees added to the life of a. loan when a payment is missed altogether. No one, of course, can begin to understand how much pain lies behind these figures. How many dunning letters were sent and how many phone calls were placed to people struggling to meet their obligations? How many borrowers had to answer to an employer who’s been pestered by loan companies, calling about their workers’ missed payments? How much was lost in the way of repossessed appliances, furniture, automobiles and self respect? State figures show, too, that 75 percent of all those who use loan companies are repeat customers. In an April, 1976, brief filed by the attorney general of Massachusetts before his state’s small loan regulatory board, the evidence presented suggested that debt becomes a way of life for many borrowers. “Over half of all those presently served by consumer finance companies renegotiate their loans every year,” the brief charges. “More disturbing is the indication that these consumers are virtually never able to retire their loans.” Says Senator Patman of his opposition to the Adams bill: “This is a people’s issue. We in the Legislature have an obligation to look out for the people who don’t have a registered lobbyist.” As the proposed legislation went before the Senate economic development committee for hearings on Feb. 28, the Ganado Democrat took direct aim at the lobby effort behind the bill. “Associates Corp. is a wholly owned subsidiary of Gulf and Western, one of the fiftieth largest corporations in America,” he told the Observer. “If this company needs passage of legislation like this to justify its existence in Texas, then I’d like to see them go back to Indiana.” Paul Sweeney is a freelance writer living in Austin. Pssst! Hey, buddy, need a loan? Judge Bert W. Thompson has presided over the U.S. district bankruptcy court in San Antonio for the past six years, a period in which he’s seen bankruptcy filings double in volume. For low-income families, those same years have been filled with unemployment, rising prices and trips to finance companies in search of loans to make ends meet. “Without a doubt, the effort by loan companies to collect from insolvent persons drives many to bankruptcy courts,” says Thompson, adding that a good majority of those who appear before him are in trouble with commercial lenders. Over the years, Thompson has had to listen to many stories of severe indebtedness, including one from a man who was in hock to 24 loan firms at the same time. He says it is not unusual to find that three or four liens totaling $6,000 have been placed on $500 worth of furniture. “The interest rates at [finance companies] are high, they add on life and disability insurance, and once you get involved it’s often impossible to ever pay them back,” says the judge. Thompson outlined the events that typically lead a person to his courtroom: A salaried family man earning $800 a month against bills of $700, and with little or no money in the bank, is hit with a piece of bad luck. It might be that his transmission gave out, or that one of his kids got ill. He has nowhere to turn for help but a finance company, and so he takes out a loan. Then some other misfortune befalls him, he misses a payment or two, and the lender starts calling,his employer. “If he gets fired,” says the judge, “then he really is in trouble.” The next step is bankruptcy court. “I think the problem is that the individual salaried person has no place to go in case of emergency,” the judge concludes. “As a result, [the consumer finance industry] is a very necessary business. The question is how much do they have to charge to justify lending money?” Paul Sweeney