Senator Eliot Shapleigh - El Paso, Texas

When Jesus chased the money changers from the temple, he was protecting the poor from usury—something prohibited by most of the world’s major religions.  Since the founding of the Republic, Texas has upheld this tradition with strict anti-usury laws.  What about today? 

From the streets of Laredo to Beaumont, interest rates are as high as 1153 percent. 

Today, the Vice President for Government Affairs at one of America’s biggest predatory lenders is the Chairman of the Finance Commission of Texas.  And it is this Commission that is charged with protecting you.  

So what happened in Texas? 

Following the Texas revolution in 1836, the new Republic of Texas advertised in East Coast papers to lure bodies here.  As a new nation, on the frontier with Mexico, Sam Houston and others feared that Santa Ana might return, so young Texas did everything possible to lure debtors here—to settle, thrive and defend Texas. 

Often, people fleeing crushing debt in other parts of the country would scrawl in chalk on the doors of their abandoned houses the initials G.T.T. for "Gone to Texas." 

In fact, Texas' debtor protection laws have been among the most protective throughout U.S. history—that is, until Rick Perry became Texas’ Governor. 

In 2007, the U.S. Congress passed a law restricting payday lenders from charging more than 36 percent interest to active duty soldiers or their families.  Since then, seven state legislatures have attempted to expand the law and cap the interest rate at 36 percent for all citizens.  According to the Center for Responsible Lending, fifteen states currently prohibit payday loans by capping interest rates.  

In 2003, nearly 50 bills relating to the predatory lending industry in 23 states were introduced.  In 2007, 33 state legislatures introduced more than 100 bills.  Payday lenders have countered these attempts by lawmakers across the country to increase regulation of predatory lending by upping their political giving.  Since the 2000 election cycle, companies and associations representing the predatory financial services industry have contributed more than $10.2 million to state-level candidates and party committees in 41 states, and individuals associated with the predatory lending industry gave another $3.54 million in 45 states. 

In Texas, the campaign contributions worked like a charm on Perry, who has actively thwarted any regulatory reform of the lending industry throughout his tenure.  Thus, while scores of states have cracked down on predatory practices such as pre-payment penalties and loan flipping, effectively putting the brakes on usury, Texas has become a safe haven for the predators and a hot bed of predatory lending.   

Payday lending, in particular, has flourished.  Payday loans are short-term, high-cost loans secured with a check post-dated to payday.  Payday loans trap consumers—borrowers are largely low-income, minority, or members of the military—in a cycle of debt that often leads to financial ruin.  The explosion of this industry over the last ten years offers a poignant illustration of Perry’s failure to protect Texas consumers.   

Payday lenders have actively wooed Texas politicians in an effort to prevent greater regulation.  Cash America, a Texas-based payday lender, made almost $825,000 in political contributions nationwide from 1999 to 2006.

During this time period, Texas ranked 5th in the nation in total political contributions from the payday lending industry.  The industry has given $715,982 since 2000, over half of which was donated in 2006:

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