Senator Eliot Shapleigh - El Paso, Texas

By the time Bill Hunt came to her aid, the woman had already paid $150 in interest on a $250 loan – in just six weeks' time.

To a ruthless, leg-breaking loan shark?

No, it was just one of the many payday loan shops that have sprung up in strip shopping centers across the state.

Self-respecting loan sharks probably wouldn't dare demand the interest rate these cheery storefronts get.

And by calling them "fees" instead of interest, the businesses manage to operate outside of state lending regulations.

Adding insult to injury, many of the payday lenders are set up under Texas law as credit counseling services.

Here's some credit counseling: Don't go near a payday loan store.

But of course that's easy to say and hard to do if your electricity is about to be cut off or your car repossessed or any of the myriad other things that can affect families living paycheck to paycheck.

One car breakdown, one sick child can spell disaster.

Mr. Hunt is a former business professor, and he said he's tired of seeing hardworking folks victimized by what looks to him like predatory lending.

"I guess it just offends my sense of justice," he said.

Mr. Hunt is now president and majority owner of an interesting business in Athens, east of Dallas. He's a textile recycler. The business is called Texas Ragtime, and it buys castoff clothing by the bale. Some gets turned into wiping cloths for industrial use. Some gets reused as clothing in Africa and Latin America.

He employs about 40 people in sorting and sewing jobs. The pay is well above minimum wage but still modest. And he's pained by how often his employees fall into the trap of payday loans.

For those lucky enough not to be familiar with them, payday lenders basically deal with the working poor. People who can prove they have a job receive a small loan until their next payday.

The annual percentage rate can range from 400 percent to 800 percent.

That sounds ridiculous. But such loans can actually be cheaper than paying a utility reconnection fee or the penalty on a late rent payment. That's the defense offered by the payday loan industry.

So the working poor turn to them out of desperation. "These folks are absolutely being used," Mr. Hunt said.

When Mr. Hunt finds one of his workers in that fix, he provides a no-interest advance on wages to pay the loan off. "I haven't lost an advance that I can think of," he said. "These people are quite honest and hardworking."

"It's just really hard to pay back these loans," said Don Baylor Jr. of the Austin-based Center for Public Policy Priorities. "People end up paying $800 to borrow $300."

Mr. Baylor has been working for the last three years to get legislative protections passed. He's hoping for more success when the Texas Legislature convenes in January.

Recognizing that there is a need, the organization is also working with banks and credit unions to encourage short-term emergency lending at reasonable rates.

But the quickest solution is to eliminate the need. And that's done through consumer education, said Todd Mark of the Consumer Credit Counseling Service of Greater Dallas.

"People have to understand the importance of having some emergency savings," he said. "If you don't, you are already in financial crisis."

With recession taking hold, that's a painful reality many more of us may face – along with the temptation of payday loans.