Yesterday in El Paso, the City Council unanimously voted to proceed with enacting an ordinance to regulate Payday and Auto Title Loan businesses. The Council asked the City Attorney to draft the ordinance and it could be approved by January. This will be the 4th such ordinance in Texas, if it is ultimately put into effect.

As of today we know of ordinances in Dallas, San Antonio, and Austin. I believe that each of the cities are entangled in legal proceedings brought against them by CAB’s.

Some of the details of the proposed El Paso ordinance are:
• Require lenders to provide borrower’s with financial counseling information.
• Payday loans would not be allowed for more than 20% of the borrower’s monthly income.
• Auto Title Loans would be limited to 3% of the borrower’s annual income.
• Auto Title Loans would also be limited to no more than 70% of the vehicle value.
• Installment loans would be limited to no more than 4 installments, refinances would be limited to 3.
• CAB’s would be asked to register with the City of El Paso.
• Would go into effect in July 2013.

It is curious that the effective date is July 2013. I am thinking that the City of El Paso knows that there will be activity in the Texas Legislature regarding CAB operating rules and city ordinances. Consider the additional compliance burdens on licensed CAB’s with locations in cities with ordinances. Is it reasonable to ask any business to manage compliance to Federal, State, and now City regulations too?

As an industry, we need to dig our heels in on the local ordinances. 2012 has been a good year for CAB’s under the new licensing and we have demonstrated our good faith, desire to operate legally and fairly. Let the State of Texas handle this and keep the cities out of it. The Texas Finance Commission has expressed its position on the ordinances, and they indicated that an improvement on this problem was needed. So, it is my opinion that the version of the El Paso ordinance that was unveiled may not make it to July 2013. Something different might end up being put in place, or perhaps nothing at all after the session.

If you are interested in learning more, I am working with my contacts in El Paso and Austin to gather additional information on how to play a part in the fight against the ordinances. Will know more soon, the session starts next month and the El Paso bill is slated to be formally introduced on December 19th.