El Paso is preparing to implement an ordinance that would limit the amount of money payday lenders can offer folks who are in need of a little extra cash.
Although it was originally scheduled to go into effect last summer, city officials decided to postpone the ordinance to give a few new city council members a chance to look things over. The limitations are presently scheduled to go into effect on January 16.
The El Paso ordinance introduces a number of rules and regulations that payday lenders must follow going forward. Not only are the companies required to limit the amount of money they hand out to clients, they are also required to provide these individuals with information about credit counseling.
Folks who seek help from payday lenders, companies that critics often refer to as “predatory,” can only borrow 20 percent of their monthly income. What’s more, clients can only renew these loans three times.
While the El Paso ordinance passed with a vote of six to one, representative Eddie Holguin feels that restricting how much people can borrow from payday lenders is akin to hand holding. In his opinion, people need to deal with their own problems responsibly.
“At what point do people have to take responsibility for their own actions? I do believe there has to be some type of regulation, but I do also feel there has to be a line that the government should not cross. Where that balance is, I don’t know,” he explained.
City Rep. Larry Romero, who voted against the ordinance, also feels that the city is spending too much time trying to keep people from making financial mistakes.
“It seems to me too many times in the past the city has tried to save people from themselves. At some point we have to say, ‘Wait a minute, they’re grown ups and they should know what they’re doing.’ If they don’t, then let’s find a way to educate them,” he said.
To crack down on fly-by-night payday lenders, the El Paso ordinance requires companies to pay a fee of $390 to register with the city. Lenders are also required to keep three years worth of loan records that are available to officials at a moment’s notice. Failure to adhere to these rules could result in stiff fines and penalties.
What do you think about the El Paso ordinance regarding payday lenders? Do you think the new rules and regulations are unfair to these businesses?
[Image via Wikimedia Commons]