The Ordinance (2016) - full transcript

(slow piano music)

(voices chattering)

(people laughing)

- This is small town Texas.

We are a food pantry with
all the bells and whistles

for low income people.

So, you want two of this and two of that?

- Yes, ma'am.

- Our goal is to try to alleviate
poverty as much as we can.

We were finding that a lot of our clients

who were coming for financial assistance



were in debt to payday
and auto title lenders

and they come in here for help

and of course we wanna
help and do all we can,

but far better to pass an ordinance

that's gonna protect people.

- Some of you may or may not know this,

but there is an issue with payday lending

here in our community

and so Miss Jennifer's going to

take us through this presentation.

(audience applauds)
- Thank you.

So payday or auto title
loan is a small dollar loan,

a cash advance.

You go in and you get $300
for an emergency expense,



but you're paying $75 every 14
days for the $300 you borrow.

The auto title loan is
a little bit different.

It's a larger loan, so you
might get $4,000 loaned.

$1,200 is your fee every 30 days,

so you can pay back $8,000
(ominous instrumental music)

and you still owe the
original amount of the loan.

- How do we put this illegal
practice in legal terms?

- It's an interesting question.

(slow piano music)

During the oil bust in the '80s,

there were a lot of people who
suddenly had credit problems

who had never before had them,

so the legislature passed

the Credit Service
Organization Act, the CSO Act,

which was designed to have
non-profit organizations

help a borrower to access credit

even though they had bad
credit so they could repair it.

2004, the lenders get together
and they start looking,

combing through state law.

They found the CSO loophole.

The CSO has no limit
on the fee they charge

because the assumption was

it was non-profits not charging fees.

Lenders immediately took advantage

and we went from 300 or 400
payday lenders in 2004 in Texas

to 3,200 payday lenders in 2014 in Texas.

More than Whataburger, McDonald's,
and Starbucks combined.

- I know I saw that one to TitleMax.

No, it's not here.

The card's in here.

We don't turn the AC on.

I'm kind of a penny
pincher I guess you'd say

because that's the way I was raised.

I can.

You can see some of that
up there on that shelf.

I get the Ziploc bags
after I've used them.

If they don't have a hole in them,

I'll wash them out and use them again.

My husband thinks I'm crazy,

but it saves a lot of
money in the long run.

There, TitleMax.

We borrowed 4,000.

The total payments $4,507.

We had to get a loan
against my husband's truck

because there's not enough
work and one thing to another.

We're coming to you all for help.

If we didn't need to, we wouldn't.

My husband is dying of cancer

and of course I've had three
strokes and a heart attack,

bypass and all that good stuff,

but I mean, that's
something you deal with.

So, anything I can do to pay you back,

you know, we'd be glad to do.

- First of all, I'm so sorry
to hear that this has happened.

I would love to be able to just

walk in and pay off this loan,

but we don't have the financial means.

- Help me understand.

Do you still have that
$4,000 principal to pay off?

- Yes.

The payments are 500 a month

and I've gotta come up
with the 4,000 at one time

in order to keep the truck.

- Yeah, and it's not
possible on a fixed income.

- [Judy] No.

If I had the money to do that,

I wouldn't have got
the loan to begin with.

- (laughs) Right, yeah.
- Yeah.

- The loan was not explained

that you just pay all this for nothing.

Well, you know, it's giving it to them.

I might as well give it to
you and go for a good cause.

(man laughs)

- We have a few cases where we have

helped people pay off their loans.

Those are in really dire situations,

but that's not something
sustainable that we can always do.

There are alternatives
that are in the works

for people who need small dollar loans

to be able to get those
loans from a better place

that is easier for them to pay back,

but those are still in the process

of getting off the ground,

so you just feel like we can point them to

the Consumer Financial Protection Bureau.

They can file complaints there,

but there are no really
great solutions as of yet.

We're still working on them.

So, something that's
kind of unique to Texas

is that we are in the Bible belt.

If you need a supportive community,

one of the most effective ways
to communicate with people,

to get ahold of people
is through churches.

We have seen that people
from the faith community

have said, "No, this isn't okay.

"We wanna do something about it."

- What's happening is
we became really alarmed

when many of those who
came to seek help from us,

whether it was to take
care of rent or medication,

we found out that at
least one third of them

in this whole state now have these type

of loans with the payday lenders.

- Why is it important to the church?

Because it's wrong to
treat people that way.

It is wrong to go to people
who are already in a bind

and design something
to make the bind worse.

- It's a great business model for them

if you wanna exploit people.

God is concerned about the impoverished,

about those who are poor,

about those who are down on their luck

and there's no way that
you can call yourself

moral, ethical, spiritual
and exploit poor people.

(slow piano music)

At the state level, it's been
a very challenging fight.

I mean, we're definitely
up against Goliath.

- The legislature created the problem.

It needs to be fixed.

- The business of quick and easy cash

is coming under scrutiny as
representative Tom Craddick

prepares a bill to regulate
the payday loan industry.

- Well, thank you very
much for being here.

This is a pretty sad day in
the state of Texas I think.

We got the number one state

in income and jobs in the country

and yet we're charging the
highest rates of any state

in the nation on payday loans.

In 2011 we introduced a bill

in the House and had one in the Senate.

When we first introduced it,

it was almost 50-50
Republican and Democrats.

Senator Davis, who's a Democrat,

she did the Senate version,
I did the House versions.

- There truly hasn't been an issue

that I've worked harder on
than the payday lending reform.

You had Tom Craddick, strong
Republican on the House side

and you had me, very liberal Texas senator

on the Senate side.

I used to joke that we
knew we were onto something

when you had not only Tom
Craddick and Wendy Davis,

but you also had the
Catholics and the Baptists

working on the same side.

- Thank you the opportunity to testify.

My name is Stephen Reeves and
I serve as Legislative Council

for the Texas Baptist
Christian Life Commission.

- I'm Frederick Haynes.

I'm the senior pastor of Friendship-West

Baptist Church in Dallas Texas.

- The Catholic bishops call on legislators

to close the CSO loop.

- [Tom] We've tried to pass a bill.

What happens is it goes
to a committee first.

- The jury lays out HP3047
as pending business.

- The committee is where bills
get negotiated and written

for the opportunity then
to be heard on the floor.

- So, let's talk about
the tricks that are played

in committees at the state level.

The payday lending
industry and their lobby

makes sure that these bills
are put into committees

where the likelihood of passing a bill out

with any teeth to it is pretty small.

- And they've been very effective

in getting to the committee chairman

or majority of the committee
and they can kill these bills

or never bring it up for a vote.

- If there are no objections,

the chair will leave HP3047 pending.

Hearing none, HP3047 is left
pending here in committee.

HP2803 is left pending.

- [Clerk] The chair will
leave HP2808 pending.

HP2808 is left pending.

(slow instrumental music)

- After 2011 when the state failed

to enact meaningful reform,

people of faith and people
in the advocate community,

they got busy at the local level.

(slow piano music)

- I mean, Temple's a
fairly small Texas town.

It's a very family-oriented kind of place.

Football's really big.

There are pockets of affluence

and then pockets of poverty in Temple.

Payday loans or auto title loan stores,

they tend to congregate
in lower income areas.

- Clearly, they're putting
payday lender shops

very near places where folks
find themselves in emergencies,

medical facilities,
hospitals, urgent care.

- In times of desperation, when
there's maybe a car accident

or a family member who's ill,

people will borrow from a payday
and auto title loan company

without realizing the ramifications.

- ACE had in I guess their
training manual a circle

and in that circle it showed
how you borrowed the money,

but you never could pay it back.

- This is in a training manual

for an employee of one
of these businesses,

so they know that their business model

is designed for people to fail.

They know that.

And they don't care.

They don't care.

- To have organizations which
are willing to loan people

money when they're desperate
is a very good thing,

but 500% interest on loans is immoral.

It is un-American
besides being sinful too.

(violin music)

- [Kristen] Because
there's not a whole lot

happening at the state level,

the city level is really our best bet

to bring about meaningful changes,

so we're looking at
what happened in Dallas

as an example or sort of as a model

of what might happen here in Temple.

(slow piano music)

- So, an ordinance is the local authority.

It's a local law.

It is basically the most
powerful thing that a city can do

to address a problem in a local area.

- Texans never like bullies.

We've never liked bullies.

We're not gonna tolerate it.

We're gonna stand up.

- We worked to craft an ordinance,

essentially to keep the products honest,

so if you're selling a short-term loan,

let's make sure that it
really is a short-term loan.

- It ensures that the payments
made reduce the principal

and that's really critical.

- We got started ASAP to
get the ordinance done

and with my audience being packed

by my faith-based people
and with my nonprofits

and it was unanimous both
by the city of Dallas.

- That was a great day.

If you asked the payday industry,

we upset their little gravy train.

Needless to say, that word got out.

- When we saw Dallas pass the ordinance

there in their own city,

we said that's possible
here in our own city.

We can also do that, and so we mobilized.

- Some cities are not
waiting for Congress to act.

- City council members and residents

are meeting to discuss a couple
of possible new ordinances.

- We had these payday lending roadshows

that we took to other
cities throughout the state.

It's time to end the cycle and offer

families protection from this abuse.

- They lent me $750 to make my way

through a financial emergency,

but then those fees, which are about 700%

now require me to gather the $2,500 debt.

- We show them the options of

payday lending alternatives
and ordinances.

The local leaders make a decision

as to what works best in their community

and typically end up pursuing

a local ordinance from that point forward.

San Antonio, El Paso, Austin, Houston.

- I was so proud, I was so proud.

These cities and towns,

and it doesn't matter
whether it was used in Texas.

Fourth largest city in America.

- When Houston passes
something that began in Dallas,

that's a thing 'cause our cities
have this sense of rivalry.

- And I'm so glad to say that
we're brothers and sisters.

I'm just so proud.

(audience applauds)
- Yay.

- I wish I could say they'd been passed

by my hometown of Fort Worth.

Unfortunately, the city
council nor the mayor there

have shown the maturity to do
something about this issue.

(somber instrumental music)

- Texas is known as a very
pro-business environment.

It's not a very friendly environment

to looking at regulating any business.

I think the assumption is always
that the business is right.

- Sadly, city by city
by city is the only way

we've been able to protect
people in this state.

- [Man] Well, good morning, everybody.

- [Group] Good morning.

- The Temple City Council is voting on

payday lending ordinances.

They're gonna be voting.

We could use all of the support we can get

and if you would just
keep us in your prayers,

that would be wonderful.

Thanks.

- We know the Temple City
Council is going to vote on this.

From what we understand,

it looks like it may not be
in favor of the ordinances.

- When payday lending
was first brought up,

there was some opposition
from city council members.

We are just working to get
support for the ordinance,

communicating to city council members

that this is how we'd like you to vote.

Rucker developed a letter that people

emailed to the city
council and to the mayor.

We also had a bunch of
postcards that just said,

"Hey, I encourage you to vote yes."

We distributed I wanna
say, like, 1,200 of those,

so don't know how many of
those made it in the mail,

but I think a lot of them did.

- Now we're working to mobilize

other community leaders and pastors.

- The Helping Hands Organization

asked if I would come and
speak before the city council

on behalf of that ordinance
and so I'm going to.

Done a lot of research on how
the opposing side views this

and one of the big issues is
more government intervention

into our lives, which I can understand.

I struggle with that too,
but the idea that this

helps protect the citizens of this city

I think is what will
sway the city council.

- You know, people who need
money can be taken advantage of.

Historically in the United States,

there were very tough
laws about interest rates

and many of those made it
into the state constitutions.

(violin music)

Texas has a 10% per
year limit on interest.

What we've seen though is a strategic

avoidance of those laws and
it's just really expanded

across the country in
a very deliberate way

because there's a large
industry behind it.

- The industry is fighting
back in Washington

through very generous
campaign contributions.

- Controversial payday loan industry.

Both Jeb Hensarling and Pete Sessions

are suspected of taking
campaign contributions

from payday lenders closely
followed by their votes

to protect the industry from
threatening legislation.

- Hearing is entitled
the semi-annual report

of the Bureau of Consumer
Financial Protection.

- These businesses are so effective

in their work with politicians

that they don't even need to speak

because the members of the committee

use their talking points.

- You're coming down here,
picking on the people

who are making loans to
people just trying to

pay the rent on the end of the month.

- That is discrimination
against African Americans

when your rule and your action

denies them access to that car.

- I will say this.

Many of my colleagues did not walk away

with much confidence in the
direction that you're headed.

- Payday lenders have the
money of all the poor people in

our community that they have
robbed to spend on lobbyists,

so really, the only hope we
have of a national solution

in the present political
climate is effective regulation

from the Consumer Financial
Protection Bureau.

(audience applauds)

- Our central responsibility
is to stand on the side

of consumers and see that
they're treated fairly.

(slow piano music)

- When the CFPB found
out about our roadshow,

they called and asked,
"Can we come and join you

"on one of your roadshow stops?"

Now I'd like to introduce
Director Richard Cordray.

(audience applauds)

- Thank you for convening
such an impressive group

and a group that has our
admiration and respect

for the work that you do every day

on the front lines with
people who are in need.

We have come here because
we wanna hear from you

and know more about how
you want us to proceed.

- At this moment in time,
at this juncture in history,

we actually have somebody
who has the authority

to do something meaningful

and really move the needle and that's him.

(audience laughs)

(audience applauds)
I mean, you look at

the whole apparatus of
government and it comes down to

you have a pen that can change this

and so here's what I try to do.

I pray regularly and faithfully
for Director Cordray.

When you know there are millions

of people who are counting on you

and a couple of dozen people
who are assaulting you,

we hope you'll hear from
us, we are so grateful

for the work you're
doing Director Cordray,

for your staff, for the thoroughness

with which you're doing
it and we are with you.

Thank you.

(audience applauds)

(slow piano music)

- So, Temple City Council
is meeting tonight

to vote on ordinances.

There's a good chance that someone

from the payday lending
industry will be there tonight

and will speak at the meeting.

We've worked really hard to
help meet people's needs,

in terms of food and finances,

but if we could have backing
from the public sector

and have them be playing a role as well

in protecting people from
predatory lenders, that's huge.

(lawnmower rumbling)

- Will the city council
vote for this ordinance?

I don't really know.

I hope it'll go through, but
I'm not sure that it will.

(voices chattering)

Good, how are you doing?
- Good to see you.

- Can I sit by you?
- Absolutely.

- I think it is a risk.

I mean, any time you become
more public with your stance

or get involved in those different arenas,

it can cause some kind
of interesting feelings.

People oppose that you guys
just do the religious part.

Let us handle the rest of the part

and I just don't think that's
the way it's supposed to be.

- Good evening, ladies and gentlemen.

Welcome to this meeting of
the Temple City Council.

Please rise as Mayor
Pro-Term Russell Schneider

leads us in the invocation.

- Most gracious and heavenly Father.

We just thank you for this great city.

Guide us and direct us as we go.

Amen.

- [Everyone] Amen.

I pledge allegiance to the flag

of the United States of America.

- They have had so many people

that they've heard from in the city.

It's their job to represent
their constituents,

so I hope and pray that
they will act accordingly.

- Item five, consider
adopting an ordinance

related to regulating
credit access businesses

commonly referred to as payday lenders.

- The ordinance requires
a loan must be repaid

in no more than four installments

and at least 25% of each
installment payment has to go

toward the principal amount
of the loan and not to fees.

- At this time, I'd like
to open the public hearing.

Anyone wishing to speak
on this matter may do so.

- Bill DiGaetano speaking
tonight as the president

of the United Way of Central Texas.

- I was pleased to hear
the council's investigating

the payday and auto title loan policies.

- I know you've received
postcards, letters,

emails, phone calls, and personal visits.

This is an issue that matters deeply

to many of your constituents.

- Robin Marriott, pastor
of First Baptist Temple

and I wrote this out so
it was not to preach.

(audience chuckles)

As a faith leader I also
have a responsibility

to protect the people of our community,

just as this council does.

As a city council, you
have the opportunity

to be a good Samaritan to
those who have been abused

and taken advantage of by others.

Thank you.
- Thank you, sir.

Who else wishes to speak on this?

I got real excited reading
everybody's name off

and now nobody wants to go?

(audience chuckles)

- Some politicians are gonna
vote the way they want to,

regardless of what their
constituents have to say.

If there is community
support for something,

it's harder to ignore that.

- Well, if there is no
one else wishing to speak,

I will declare the public hearing closed.

- Mayor, I'm a business
owner and I do not think

it's the city's responsibility

to tell a business how much they can make.

I just don't believe that's right.

- I don't think anyone
likes a lot of regulations,

but that's what we stand up
here and do all the time,

is vote on different
regulations for anything,

from the roads to buildings, whatever.

Let's again take care of our citizens

just like Pastor mentioned before.

This is what we're instructed to do.

- You know, this is a difficult topic

for all of us I think to consider.

I do not feel like

it is the city's role
to be regulating this.

I wish that the state or
the federal government

was involved in it, but with their lack

of doing anything about it,
I think we're the source that

needs to step in like many
other cities in the state have.

- I have a hard time regulating a business

that again, has customers.

There's a reason why
there's a market for this

and it's because these
typically are higher-risk folks.

522%, I understand that,

but if it was such a horrible
place to do business...

- I think that looking at it personally,

I'm in a business that is regulated,

but the regulations that
are put upon our businesses,

it's typically because
somebody has not done

what they're supposed to be doing.

I understand that there
are ideological decisions

and feelings that people have,

but I think that this is the opportunity

for us to do something right

and do something that helps those

that may not have the opportunity

to seek help in any other way.

More comments?

- [Council Member] I make
a motion for approval.

- [Council Member] Second.

- Council Member Cloud?
- Ay.

- Council Member Davis?
- No.

- Mayor Pro-Term Schneider.
- No.

- Council Member Morales?
- Ay.

- Mayor Dunn?
- Ay.

(inspirational piano music)

- You may remember that I
had asked you all to pray

about the city council meeting
as we were going and speaking

and just asking city council to pass

the ordinance against
payday loan businesses

and I'm happy to say that it passed.

(crowd cheers and applauds)

I think that we're gonna have clients

who are gonna continue
to take out payday loans.

I think that what's gonna
be so important is that

they will be able to make
more manageable payments,

pay it off more easily, keep
more money in their pocket,

and that's just a stepping stone towards

not being in poverty, which
is ultimately what we want.

Have a great day.
- You too.

- When I hear that an ordinance
passes in a community,

I'm very proud and happy about that.

It means to me that
people have become aware

of an issue and they've taken action.

The best way to judge a
society, how well it's doing,

is how well families are
doing and how well the poor

and the vulnerable are
being taken care of.

- The local ordinances
shows what's really possible

when churches and pastors
stand up and engage

and partner together with
nonprofits and other people

to try and make a positive
change for their city.

- I'm tickled to death

they're finally trying
to do something about it.

I would love to be up there

and push them right along, you know?

(slow instrumental music)

- [Reporter] Tonight
Mesquite became the ninth

North Texas city to approve
to regulate those businesses.

- A city councilman plans to introduce

a proposed ordinance
this week to crack down

on so-called cash advance
and vehicle title lenders.

- City council today held the
first of two public hearings

on a proposed ordinance to regulate

the payday and title loan industries.

- The city of Midlothian
has unanimously approved

adding more regulations for
quick cash loan companies

that charge huge interest rates.

- [Reporter] I'm glad
that cities are doing

what the legislature failed
to do in the last session.

- I'm delighted to be here
today as part of a broad network

of nonprofits, faith-based organizations,

and the faith community in support

of addressing payday and
auto title lending practices.

- I'm gonna step out of my
moderator role for a minute.

This is a horrible practice
that needs to be curbed.