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7.4i Atsw,s4s V:44 Isamar Lanusse and her daughter, Vicky, in front of their rented home in East Austin. 4Y,4 photo by Melissa del Bosque THE PERILS OF PAYDAY High-interest lending is a poorly regulated, billion-dollar business in Texasand it’s booming. by Melissa del Bosque IIsamar Lanusse doesn’t want her 14-month-old daughter, Vicky, to grow up worrying whether there will be food in the refrigerator. A 34-year-old single mom, Lanusse works 40-hour weeks driving elderly and disabled folks to their doctors’ appointments in Austin. The job earns her $27,500 a year, barely enough to get from paycheck to paycheck. But she is determined to gain financial stability. “My mom raised us by herself on welfare,” she says. “I want to break that cycle.” Lanusse always saw owning a home as the first step toward that goal. Four years ago, she decided to try. Needing $200 for initial paperwork fees, she found herself several days away from the next paycheck. On her way home from work, an East 14 THE TEXAS OBSERVER MAY 1, 2009 Austin storefront advertising payday loans caught her eye. “They said they’d give me $200 right then and there she says. “So I took it” She didn’t get the house. Instead, she found herself in deeper financial peril. “I got trapped in a cycle,” she says. When she couldn’t make payments on her high-interest loan, “they would offer me more money and then charge me 500 percent interest plus fees. It was a mess.” Lanusse was luckier than many; borrowing money from family members and skipping utility bills, she escaped from loans that had quickly added up to $1,000. She ended up in a financial hole that’s been hard to dig out of, though. “I kept thinking I could get back on track, but it never happened:’ she says. Not long ago, she qualified for a year of subsidized rent in an East Austin home. It’s an increasingly common story in Texas. In low-income neighborhoods across the state, payday lenders are popping up on street corners and major thoroughfares at a rapid pacefrom 1,513 storefronts in 2005 to more than 2,800 today. During the economic downturn, such companies as Cash America International Inc. and Ace Cash Express Inc. are racking up record profits. The largest payday lender in Texas, Fort Worth-based Cash America International, reported $1 billion in revenue for fiscal 2008its best year ever. In all, Texans took out $2.5 billion in loans from the payday companies last year. Federal laws designed to crack down on companies like Cash America International have backfired in Texas. In 2005,