Payday Lending Testimony

Yesterday I testified at the Texas House of Representatives Committee on Investments, Pensions and Financial Services about the need for payday lending reform in Texas. Below is a copy of my prepared remarks (my spoken testimony was a bit different):

Testimony of

Rev. Timothy B. Tutt

Pastor, United Christian Church

Austin, Texas

To the State of Texas House of Representatives

Committee on Invesments, Pensions, and Financial Services

Regarding Payday Lending legislation

Tuesday, March 22, 2011

Madame Chairman, Members of the Committee:

I am the pastor of United Christian Church here in Austin. Quite frankly one of the things that I do as the pastor of a church is worry. I worry about church members when their loved ones die or are sick. I worry about couples I counsel with when they are getting divorced. I worry about church members who are in the hospital facing huge bills.

And I worry about people when they lose their jobs.

You know, of course, that schools are facing huge budget cuts. We have several – maybe 25 or 30 – teachers in our congregation. So I’m worried about those teachers.

Three of our church members teach at Northwest Elementary School, in the Pflugerville School District. That school may lose four teachers dues to budget cuts. So there is a lot of stress and distress at that school.

Then in the middle of all of that worrying, these flyers showed up in the school mailboxes. Flyers from a local payday lending establishment were mailed to every teacher in that school offering them “fast cash.”

If you read the fine print, the flyer says, “The APR for a $360 Advance is 533%.” The print is tiny, but at least it’s there – but that is appalling: 533%. And the flyer was sent to elementary school teachers who are afraid they are going to lose their jobs or have their salaries cut.

Madame Chairwoman, Members of this Committee: That is wrong. This is one example of the payday lending industry preying on fears and offering quick fixes that simply sink people further into debt.

What this flyer promotes may currently be legal. And they may have even told the truth in the tiny little font at the bottom. But it is immoral.

As the pastor of a Christian congregation, I see that the scriptures of our faith tradition are clear. Exodus 22: 25 says, “If you lend money…to the poor among you, you shall not deal with them as a creditor; you shall not exact interest from them.” Jesus himself said, in Luke Chapter 6, “If you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive as much again. But… do good, and lend, expecting nothing in return.”

Now, I don’t expect the payday lending industry to reconfigure their business practices to conform entirely to these biblical standards. And I understand that charging a reasonable amount of interest makes sense in their business climate.

But this example, and the current practices of the payday lending industry acting as CSOs, are not reasonable.

The current practices of the payday lending industry are immoral, out of control, and predatory.

I urge you to support legislation that closes the CSO loophole, sets fair and reasonable rates and fees, and stops the cycle of debt.

There’s a lot to worry about these days. Reforming payday lending practices gives us one less problem to worry about.

Thank you very much.