Exploiting Our Citizens: Predatory Lending and its devastating effects on our Waco economy

by Ryn Farmer

 Each year, nearly 9 million dollars are drained from the Waco economy because of excessive fees charged by predatory lenders.

Recently, a documentary came out called “Spent: Looking for Change.” It follows the lives of four different families who are struggling to get by and end up using payday loans and auto title loans to help supplement their income. One of the individuals in the documentary states, “It’s not an irrational choice. It’s just not a productive choice… and it’s a costly choice.” And sometimes working families do not have any other option. You can watch “Spent” by clicking here.

Payday loans and auto title loans emerged in the 1990s. They were developed as a way to provide small cash advances to individuals who had poor credit and could not get a loan from a financial institution. Gary Rivlin with AlterNet writes, “By 2006, the payday loan was a $40-billion-a-year industry with more storefronts scattered around the country than the combined numbers of McDonalds and Burger King, each offering a kind of fast-food finance to the working poor at annual interest rates as high as 500 and 600 percent, depending on the state.” (“Meet the Man Who Made a Fortune Exploiting the Poor With Payday Loans”)

This issue has garnered much conversation, both in the state of Texas and in Waco, over the past several years. In many other states payday and auto title lenders are highly regulated, but in Texas few regulations exist to keep these entities in check. Because of the lack of regulation, there has been a tremendous growth of payday lenders in Texas. They use coercion to reel in consumers and then extort them by keeping them in a tangled web of debt through excessive fees and multiple refinances of the loan.

Under the current state law:

  • No limits on fees
  • No limit on interest rates
  • No limit on the size of the loan
  • No limit on rollovers or refinances
  • No limits on ability to repay based on income

The impact on consumers is devastating. In Texas, the loan rate can be upwards of 500% APR. The average amount borrowed in Texas is $500 for a payday loan and $800 for an auto title loan. The average payday borrower in Texas pays $840 for a $300 loan. Many payday borrowers take out additional loans to cover previous loans resulting in a vicious cycle of debt. In the greater Waco area, there are 65 storefronts and 55% of consumers refinance their payday loan (Citizens for Responsible Lending, 2014; Texas Appleseed, 2013).

All of this seems absolutely ridiculous, right? So how is it legal? The diagram gives a short explanation. The consumer pays the money to the Credit Service Organization (CSO) or the Credit Access Business (CAB), which is the storefront, and only interacts with them. The storefront (the CSO/CAB) is unregulated in Texas and can charge any amount they want in fees. The lender (usually a bank) provides the loan capital at a 10% interest rate to the CSO/CAB and the lender does not have a direct relationship with the consumer. The consumer pays the 10% interest plus the additional fees that the CSO/CAB adds to the loan.predatory lending graphic

A woman from Waco tells her story about using a payday lending service after experiencing some unforeseen difficulties: “My husband was injured at his work place and had to go on disability. That meant we were on a fixed income. I started with a cash store because I saw an ad on TV. I got $300. Every 2 weeks there was a repayment due. I would pay $67 or $70 in fees to refinance the loan. I’m on a part time income. I have paid $150 in interest and I still owe $300. Because I couldn’t pay it back I got another one and another and another one to pay back my other loan. My husband also took out 4 other loans. After a year of this they let me break down the loan into 4 payments, but you have to ask for this plan. They don’t advertise it, and you have to qualify. We barely had enough money for food… I closed my bank account and stopped paying on the loans. I know it’s probably on my credit report. If you’re going to do work with legislation you should tell them to offer payment plans to customers. The payday lenders don’t tell their customers about that option. It would help to have payment plans instead.”

Little is being done at the state-level to address these concerns. There has been a push in the state of Texas to pass ordinances at the local city level and to create ethical alternatives. So far, 18 Texas cities have passed ordinances to limit payday and auto title lenders. Waco has worked to address this in the past and is currently ramping up efforts. However, few viable alternatives exist in Waco so far.

Citizens for Responsible Lending is a group of individuals from a variety of sectors in Waco who have formed several task teams to work on addressing predatory lending. They are looking at what type of ordinance could be passed within our city and in the greater Waco area to limit payday and auto title lenders. They are also seeking to develop an alternative to these negative business practices that exploit our citizens. If you are interested in joining Citizens for Responsible Lending or would like more information about this issue, please contact Ryn Farmer or Alexis Christensen at 254.235.7358 or email them: ryn@wacocdc.org  or  alexis@wacocdc.org.

ryn farmerThis Week’s Act Locally Waco Blog post is by Ryn Farmer. Ryn is a Community Organizer at the Waco Community Development Corporation (Waco CDC). Waco CDC helps to inspire and cultivate healthy neighborhoods. They consider a healthy neighborhood to be one that is safe, clean, and diverse; one in which it makes economic sense for people to invest and one where neighbors manage change successfully. If you would be interested in writing for the Act Locally Waco blog, please send an email expressing your interest to ashleyt@actlocallywaco.org.


I am not an Object or a Commodity. I’m a Person.

by Ryn Farmer, Community Organizer, Waco Community Development Corporation (Waco CDC) 

I have really been soul-searching over the last few years about what it means to be culturally competent. It is a term widely used in the social work field and has also gained a lot of traction in the medical field over the past few decades. I think it is something we need to really think about because we all come from such different experiences and ways of living. The idea behind “cultural competency” stems from the desire to respond respectfully across cultures and provide sensitive, holistic care to clients. It is about educating ourselves, before we meet people, about their culture so that we can respond thoughtfully and effectively. All of that sounds great, right? But for some reason this phrase has never really resonated with me.  

Before I talk more about cultural competency, I want to make sure we are defining culture the same way. So as a basis for my thoughts, I’m defining culture as our traditions, norms, customs and beliefs in relation to gender, age, race, sexual orientation, socio-economic status, religion, language, etc. We operate from our core beliefs – both the internal and external elements that influence our life – and that affects (but does not determine) the way we think, how we behave and what we believe. 

The phrase “cultural competency” indicates to me that we can arrive at something, that there is an ending point. That seems rather presumptuous because I know I could never be fully culturally competent. Of course, the philosophical underpinnings of cultural competency are good and desirable, and it is definitely a starting point. Many individuals won’t even begin a conversation about race, gender, sexual orientation, etc., because they are afraid they will say the wrong thing or because they have no idea what to say at all. We keep quiet because we are afraid of offending, or we decide to speak up and sound like a blundering idiot. So what is the answer? Don’t say anything at all and keep living in a world where deep injustice exists and too afraid to do anything? Speak from our limited knowledge and interactions with people and end up saying something foolish? Maybe there is another way… What if we approached culture in a slightly different manner? What if, instead of guiding our approach with the notion of “competence,” we approached with humility?  

The idea of cultural humility is much more meaningful to me than cultural competency. In cultural humility, I can come from a place of learning rather than of expertise… a place of openness and of asking questions to better understand where someone is coming from, rather than assuming I already know them.  

Dr. Melanie Tervalon and Jann Murray-Garcia have produced significant and meaningful information about cultural humility and describe it as a “life-long process of self-reflection and self-critique.” Self-awareness and reflection are the main ideas behind it, but there are other factors that come to play as well. It also involves recognizing and seeking to change power imbalances that exist in our communities and developing institutional accountability so that as institutions we are responding sensitively to the needs of people. For me, the notion of cultural humility takes away the idea that each culture has a set of rules that everyone follows. I think if we hold to the cultural competency way of thinking, then our interactions with people are limited to what we think are the beliefs and ways of living that exist in their “rulebook”.  

I was at a meeting recently and one of the women at my table started speaking about how she wished we would quit viewing each other as objects and commodities but rather view each other as people. She talked about how we need to focus more on building relationships with each other first rather than focusing on yet another task to get done. We often assume we know each other because we run in similar circles or go to multiple meetings with the same people. But we don’t. We have only scratched the surface. So my friend was saying we need to take time to actually know each other. At the end of the meeting, my friend who said she didn’t want to be an object anymore was asked to lead a group. The person asking her said, “Because we need some color on our leadership team. And you’ve got color!” [Insert deep sigh of frustration and anger]. We have so far to go in being sensitive, in stopping to think about what we say before we say it and in truly looking at someone as a person. We must ask questions to really understand who someone is and not assume we know them because we have one gay friend, or one African American friend, or one Jewish friend. 

If we really want to understand each other and start collaborating more together, we cannot paint a picture of any culture with a broad stroke of our brush. To do so would be foolish and circumscribed. So rather than viewing the individuals in our life as a token-something-or-other, why not actually view them as people? View them as someone with strengths to be discovered, and value them for what they can bring to the proverbial ‘table’ of life. Ask meaningful and engaging questions while coming from a place of appropriate inquisitiveness and openness. And before we do any of that, let’s start by seeking to discover our own beliefs and assumptions, and challenging ourselves in the idea that our values should be held above others.  

We need to come from a place of learning. Of humility. And we need to never feel like we have arrived. Because when we believe we understand an individual because we think we understand their culture, we lose sight of the uniqueness of who they are and the gifts they can offer. Of course, there has to be grace and patience wrapped up in this whole process. I am so incredibly thankful for all of my friends who have poured out both of those things on me over the years as I struggle to better understand them. But I hope that if I, and others, come from a place of listening, of love, of reflection and of acceptance, we can accomplish a great deal more living in community together in this messy, beautiful and diverse world.  

If you are interested in learning more about cultural humility, you can watch this 30 minute documentary produced by Vivian Chavez, an Associate Professor at San Francisco State.  Also, my friend Jody Fernando has compiled incredibly thoughtful reflections from her blog Between Worlds into a book called Pondering Privilege: Toward a deeper understanding of whiteness, race, and faith 

ryn farmerThis Week’s Act Locally Waco Blog post is by Ryn Farmer. Ryn is a Community Organizer at the Waco Community Development Corporation (Waco CDC). Waco CDC helps to inspire and cultivate healthy neighborhoods. They consider a healthy neighborhood to be one that is safe, clean, and diverse; one in which it makes economic sense for people to invest and one where neighbors manage change successfully. If you would be interested in writing for the Act Locally Waco blog, please send an email expressing your interest to ashleyt@actlocallywaco.org.




Community, Leadership and Recapturing Power

by Ryn Farmer, Community Organizer, Waco Community Development Corporation (Waco CDC)

“Never doubt that a small group of thoughtful, concerned citizens can change world. Indeed it is the only thing that ever has.” – Margaret Mead

At Waco Community Development Corporation (Waco CDC) where I am a Community Organizer, we work to inspire and cultivate healthy neighborhoods. Our Waco neighborhoods are teeming with people who are passionate, willing and ready to become engaged in what is happening in the community. They have the potential to lead positive change in their own neighborhoods.

When people are forced into leadership positions before they are prepared, however, frustrations often result. For example, they may not be effective in raising up other leaders due to lack of confidence in their own abilities. Like most of us, these passionate, willing potential leaders can become more effective with some training in leadership skills.

Up until now, however, it has most often been the case that the people who get chosen to go through leadership development sessions are not necessarily people from the neighborhoods where Waco CDC works, but people who are already in some position of power or connected to a business, institution, or organization. My colleague, Alexis Christensen, and I have been the beneficiaries of some of this leadership training, and we thought, “What would it take for us to pull together all of the tools and resources we have received over the years to create something that could specifically be used to engage the potential leaders we work alongside every day?” At Waco CDC we have always focused on identifying leaders from within the neighborhoods where we work and helping them cultivate their skills and abilities. Alexis and I thought giving this process a name and creating groups of cohorts might further establish and sustain this important work. Thus, Grassroots Leadership Training (or the catchy, “GLT”) was born.

blog pic

First graduating class of GLT:Vickie Calhoun, Tommy Nays, Jeanette Bell

We officially started our GLT program in October, and we are happy to announce the first three graduates! Three community members in East Waco have completed the three-session GLT training program. During the training we covered several topics, including relationships, leadership, power, culture, cultural humility, asset based community development, communication, how to lead a meeting, resolving conflict, communication, and the importance of evaluation/reflection. One participant said, “Although I have had some leadership training, I acquired more skills by attending the Grassroots Leadership Training. We had in-depth conversations that helped me to know more about the people in my community, their concerns and what we can do together within our own neighborhoods.”

The individuals who participate in the GLT receive information that they will be able to use in their communities as they seek to work together. These skills will help them transfer power from “the top” – the traditional leadership structure – and share it with their neighbors so that the people in the community can have an effective voice in what happens within their own neighborhoods and schools. The first cohort of graduates will specifically use the tools and resources from GLT as they work to receive community input and develop a plan of action for the Northeast Riverside neighborhood. As another participant said, “I learned how to become a leader in my community and make a difference. We started coming up with ideas and ways to address things in the community and we will keep moving forward to work together in our neighborhood.”

The next target audience for this program will be parents who have children in school. As parents develop and gain confidence in their leadership skills, they can start working with other parents to be a part of the decision processes that affect their children.

It is vitally important to provide a safe place for potential leaders who live, work and worship in the community to develop their skills and abilities. When they are ready, they are the ones who need to be in the spotlight. When individuals who live in communities that have been oppressed and marginalized start taking action to bring change, hope is restored. They recapture the power that has always been theirs and create an environment that allows others to do the same.

ryn farmerThis Week’s Act Locally Waco Blog post is by Ryn Farmer. Ryn is a Community Organizer at the Waco Community Development Corporation (Waco CDC). Waco CDC helps to inspire and cultivate healthy neighborhoods. They consider a healthy neighborhood to be one that is safe, clean, and diverse; one in which it makes economic sense for people to invest and one where neighbors manage change successfully. If you would be interested in writing for the Act Locally Waco blog, please send an email expressing your interest to ashleyt@actlocallywaco.org.