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Regulating the pay day loan Industry

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For nearly a decade Brad Armelin says he signed off and approved pay day and title loans.

He says loans he knew some of his clients would never be able to pay back.

Armelin says, "that's the reason why I got out of the business because a lot of people you see them in a grocery store you see them in church and the first thing that come to their mind is crook."

Armelin was one of more than 2,000 pay day loan operations in the city of Houston.

He says the system of quick lending is set up against the consumer. Armelin says the interest rates are so high most people end up losing their vehicle on title loans. The former manager also says borrowers are never able to get out of the hole with pay day loans.

He says, "when you're in need for money let's face it you go anywhere you got to have the money. Instead of me being honest with you I'm gon tell you what you need to hear to get the money. Thirty days from now you're going to realize maybe I shouldn't have done this."

Because many people lack the credit worthiness to get a bank loan they turn to the pay day loans. In most cases all you need is proof of some type of income. Councilman Ed Gonzalez says especially in minority communities.

He says, "these locations have found a market and they target these communities and many times its communities of color and you can just drive around the city and see where they are located."

That's why Gonzalez's Public Safety committee at City Hall is working on an ordinance to address the issue.

Initially, Gonzalez was hoping the state would regulate the industry but the lobby for pay day loan operators moved in and according to Gonzalez blocked legislation.

The councilman is now hoping to hold hearings in Houston while also pushing an ordinance that would cap the number of times a person can borrow and set or limit interest rates and fees.

"Obviously we don't want to limit someone from making money but at the same time there neeeds to have some level of end or restrictions to to it...negative cycle of not being able to pay these loans," says Gonzalez.

Armelin, who is considering opening a more compassionate form of pay day lending in Louisiana, says regulation in Houston is a good idea.

He says, "what we're gonna do is you can only come to see my twice in six months...and my rates are reasonable."

Gonzalez says hearings on the issue could begin as City Hall as soon as August.

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