Payday Lenders in Austin, Texas

I'm going to pick on Austin since I live there, and on EZCorp, since it is headquartered here. There are, of course, other payday lenders active in Austin. Also, there are banks which do not lend money to payday lenders. The diagram below "follows the money" from the banks that do lend money to payday lenders like EZCorp et al. Read the PDF version of the full report here.

Note the relationship between EZCorp and Wells Fargo. Particularly my Facebook friends know I am an advocate of moving accounts to credit unions and small local banks, and this is yet another reason why. As you can see from this Google map, Wells Fargo has quite a presence in Austin as well.

Some more pertinent information from the same report:

"Bank of America and its subsidiaries (mainly BlackRock) own significant stakes
in four of the top five payday lenders: Advance America, Cash America, EZCorp,
and Dollar Financial (9.8%, $47 million)."

"Wells Fargo owns a significant stake in Dollar Financial (10.78%, $52 million)."

"Wells Fargo finances Las Vegas pawnshop chain purchase. In late 2008, Wells Fargo tripled the size of its credit line to EZCORP from $40 million to $120 million to help finance EZCORP’s acquisition of pawn shop chain Value Financial Services and eleven pawn shops in Las Vegas."

Table 5. Wells Fargo received $25 billion dollars in TARP bailout funds and financed ACE Cash Express, Cash America, First Cash Financial

Wells Fargo and other banks continue to borrow at record low interest rates from the Federal Reserve and loan the money to payday lenders making loans with interest rates of  400-500%.

The Austin City Council has scheduled a vote today on payday lender regulations. Since they are not allowed to set interest rates, the city is seeking to regulate the locations of payday lenders and cap the amount of money they can loan to an individual. Austin's Republican State Senator Jeff Wentworth was part of an unsuccessful bipartisan effort to cap interest rates in Texas during the recent legislative session. (Presently there is no cap at all.)  According to Wentworth, "What did get passed is that payday lenders have to register consumers to now make complaints.”