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Mike Kanin is the Publisher of the Austin Monitor. As such, he doesn't report on much--aside from the workings of the Monitor--any more. In his previous life as a freelance journalist, Kanin has written for the Washington City Paper, the Washington Post's Express, the Boston Herald, Boston's Weekly Dig, the Austin Chronicle, and the Texas Observer.
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Payday lender to close Austin locations
Payday loan company Check ‘n Go, which has been the subject of criticism at City Hall for predatory lending practices, will close all of its Austin locations, staffers in the office of Council Member Mike Martinez told In Fact Daily Tuesday.
According to a press release forwarded to In Fact by Martinez aide Laura Williamson, the company determined it could no longer function in the city. “(Council action) lowers the amount we can loan (and) limits the number of rollovers, therefore reducing our sales,” it reads.
Council Member Bill Spelman, who sponsored the August 2011 items putting limits on payday lenders, told In Fact Daily that the intent of Council efforts was not to run such lenders as Check ‘n Go out of the city. “Many states have regulations more restrictive than Austin’s and payday lenders do just fine,” he said. “We don’t want to run payday lenders out of town; we just want to stop them from making huge profits on the backs of the poor.”
Martinez was more blunt. “This Council, through a unanimous vote, took a stand against predatory lending in our community. I believe our unified action was a reflection of our community values, and more important, it was the right thing to do,” he said. “If those actions have a negative effect on a particular business model, it would appear that our ordinance has hit the mark and had the intended consequence of ridding Austin of businesses who prey on those who need assistance the most.”
Payday lending is, at the least, a controversial practice. Companies set up in storefronts and offer walk-in loans – termed “easy credit” – that come with often staggering interest rates that can range as high as 500 percent. Payday lenders often target members of the community who cannot borrow from a mainstream financial institution.
If costumers can’t meet their payments, or if they are so inclined, payday lenders offer them the option of rolling over their balances. Such actions bring with them astronomical increases in debt.
Council Members first took up the subject in August 2011. With one ordinance, they established a registration process, rules concerning how much of a loan must be paid back with each payment, and a cap on the number of times a payday lender can roll over a loan. That action, which was unanimous, came with a set of fines for ordinance violations. (See In Fact Daily, Aug. 19, 2011.)
They also unanimously passed a resolution that directed City Manager Marc Ott to develop land development code definitions that would severely restrict the locations of payday loan storefronts. Those passed in April (see In Fact Daily, April 30, 2012) and the second ordinance went into effect May 7.
Among other restrictions, payday lending facilities can no longer be established within 1,000 feet of another short-term loan operation, within 200 feet of several types of city zoning regions that include residential as an appropriate use, or within 500 feet of a handful of major highways.
Check ‘n Go representatives did not return a call to request comment.
According to its website, Check ‘n Go has eight locations in Austin and one in Round Rock and one in Cedar Park.
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