Yet another municipality -- Midland, Texas -- has been added to the list of U.S. cities looking to tighten control of payday lenders.
A proposed ordinance would compel payday businesses there to register each year and submit documentation for every loan made. The measure also would restrict how much customers could borrow -- no more than 20 percent of their monthly income, to be repaid in a maximum of four installments -- and prohibit loan renewal or refinance on loans that are payable in installments.
Midland leaders complain that payday lenders take advantage of a loophole in the Texas Finance Code by acting as "credit access businesses" -- middlemen that accept a loan from a bank, pass the money to a customer, and then charge the customer stiff fees that are not categorized as interest.
Midland City Council recently took up the ordinance for discussion but has not yet held a vote on it.