Texas legislators taking money from payday-lending industry, ETBU study reveals

Eight of ten lawmakers in the Texas House of Representatives received financial support from the payday-lending industry, researchers at East Texas Baptist University discovered.

Elijah Brown, associate professor of religion in ETBU’s School of Christian Studies, and student Taylor Cruse examined public campaign contributions to members of the Texas House.

See the list of Legislators who received payday-lending industry donations below.They found 81 percent of all House members received financial campaign contributions from the payday-lending industry, and the gifts cut across party lines. They discovered 70.9 percent of Democrats and 87.4 percent of Republicans received money from lobbyists working for the payday or auto-title loan industry.

“This is not a Democratic or Republican issue but a common good and public well-being issue, begging the question: Has the payday and auto-title loan industry bought the Texas legislative assembly?” Brown asked.

Brown and Cruse found out the median amount received by Democrats was $1,000, and for Republicans it was $3,250. The average amount received was $2,259 for Democrats and $6,904 for Republicans.

The payday and auto-title lending industry ranked in the Top 10 contributors to 29 percent of Democrats and 51 percent of Republicans, the researchers discovered.

A majority received payday lending funds

A majority—56.4 percent of Democrats and 81.1 percent of Republicans—received $1,000 or more from the industry, and some received significantly more. The top recipient, Speaker of the House Joe Strauss, received $160,250, researchers discovered.

They found 18.2 percent of Democrats and 43.2 percent of Republicans received more than $5,000 from the industry, and 1.8 percent of Democrats and 16.8 percent of Republicans received more than $10,000.

Brown sees that as a major problem, given the nature of payday lending. In Texas, the average payday loan is $475, and the effective annual percentage rate ranges from 250 percent to 800 percent, he reported.

“The payday and auto-title loan industry is a predatory industry running counter to sound financial principles, the common good and multiple biblical commands,” he said.

Community impact

Brown and Cruse conducted their research in the spring semester, at the same time one of Brown’s classes worked on a project about the impact of payday lending on their own community.

The class discovered 24 payday-lending locations in Marshall—more than all the banks, credit unions, and savings and loan institutions in the city.

“That means Marshall has one payday-loan location for every 1,000 people,” Brown noted.

The students discovered the payday-loan sites throughout the city, but they noted a higher density in low-income neighborhoods and in areas with a high percentage of African-American and Hispanic residents.

As part of the project, students provided information about payday loans to Mission Marshall so the ministry could offer a warning to its low-income clients. They also enlisted three churches—First Baptist and Crossroads Baptist in Marshall and Oak Grove Baptist in Harleton—to devote a Sunday to issues related to how payday lending relates to biblical teaching about justice.

During a worship service at First Baptist Church, 54 members wrote letters to city commissioners urging them to support ordinances regulating payday and auto-title lenders, Brown noted. Students also met with city commissioners to discuss the issue.

Below is a list of the representatives in the Texas Legislature with their party, district and rank among those who received campaign contributions from payday lenders, according to www.votesmart.org. The ranking represents where the payday industry ranks in terms of donors to a representative’s campaign.

Who took money from payday lenders?

* Joe Straus, House Speaker, had campaign totals of just over $6 million.

* Van Taylor had campaign totals of just over $1.3 million.