The mayor of Houston, Texas, is pushing for a payday lending ordinance that would restrain and regulate these types of lenders in the city. Such businesses often take advantage of the poor and vulnerable to generate large profits, writes Mustafa Tameez in an editorial.
Those who most often use payday loans are low-income borrowers, senior citizens, and military families. Consumers who have difficulty meeting monthly expenses may turn to payday loans, but the fees and interest associated with these products can quickly exceed a borrower’s ability to repay. Someone who initially borrowed $500 may end up repaying $1600.
The payday lending industry offers small amendments that aim to dilute proposed legislation. Houston's mayor, however, is insisting that City Council vote on a “clean” resolution without amendments. By joining other Texas cities in regulating payday lenders -- including Dallas, Austin, and San Antonio -- Houston may help build momentum for a change in the next Texas legislature.