The Catholic Diocese of Fort Worth upped the ante for local leaders this week in its crusade to curb predatory lending.
Praising new rules proposed by the federal Consumer Financial Protection Bureau, Bishop Michael Olson went even further, imploring the City Council to impose its own regulations on the high-interest products primarily used by low-income borrowers.
“In tandem, good local payday lending regulations and the proposed federal rules will greatly assist those in desperate financial straits from becoming hostages of unscrupulous payday lenders,” Olson said.
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While the Catholic Church has long opposed the industry, Olson’s call adds a powerful voice to the debate about how such practices should be handled in Fort Worth.
The city remains one of the few major urban areas in the state without locally imposed regulations.
City leaders have declined to regulate payday lenders on free-market grounds in the past. That might have been because Cash America International and other current or former payday lenders are based locally.
In response to Olson’s comments, City Manager David Cooke said he will need to research state and federal regulations before considering whether a local ordinance is needed.
He should also look at how other cities in Texas enforce their rules, since the city’s capacity to do so effectively remains a valid question.
Arlington, for example, passed a set of regulations last year; they took effect in January.
Those rules include limiting payday loans to 20 percent of a borrower’s gross monthly income; limiting repayment terms to four installments that each cover 25 percent of the principal; and requiring businesses to register with the city, maintain loan records for at least three years and provide a list of nonprofit credit-counseling agencies to customers.
Those are reasonable restrictions, but it remains to be seen how well they protect vulnerable populations.
Predatory lending practices need further regulation, and Cooke’s comments reflect some will to re-engage the City Council on the topic. We await his findings.
The Catholic Church played a significant leadership role in passing Arlington’s predatory lending ordinance, and Olson is capable of doing the same in Fort Worth.