Friday, February 25, 2011

Questions Posed to the Senate Committee Considering SB 253 on Payday Lending

(On February 22, Chad Chaddick - pastor of Northeast Baptist Church, San Antonio; and a member of the TBC Board of Directors - testified before the Texas Senate Committee on Business and Commerce in support of Senate Bill 253, which would close the payday lending loophole. The following is excerpted from a letter he sent to the committee the following day.)

Reflecting on the testimony and questions of yesterday, I wish to share two thoughts.

1.      Regarding the protections extended to our military personnel, I find it interesting that not one person objected to these protections being extended to our soldiers. That the Department of Defense has found that such credit practices are “a threat to our national security” was accepted by all. Whether this acceptance was out of a sense of real patriotism or whether it was simply out of the desire to be seen as patriotic, such acceptance begs the question – if one mark of patriotism is that we protect our military from usurious practices by capping the interest and fees that can be charged them at 36%, is it not a matter of state pride that we would extend equal protections to all the citizens of our own state? To do otherwise is to establish a double standard by which we grant one class of people greater protection than another class of people.

2.      Likewise, it is interesting to me that all present yesterday would accept the need to protect our military personnel from usurious lending, but none of us made the connection that protection is necessary only if there is a threat of real harm. If our military personnel need to be protected, it stands to reason that they need to be protected from something harmful. Yet what I heard yesterday both from industry lobbyists and from committee members was that payday lending practices are good, beneficial, and necessary. Indeed, the committee went out of its way to make the point that they wanted to ensure the continued prosperity of these businesses and their practices.

My question is, do you really want to ensure the continued prosperity of practices that we, in our patriotic pride, have all agreed are harmful? I do not deny that there is a need for some extension of credit to the working poor, but I would suggest that there are alternative ways to do so – ways that actually help the citizens of the state rather than harm them. In a government designed to be “for” the people, I would hope you agree.

I would urge your careful consideration of these matters as you hammer out final details of the bill.

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