Texas Senate Bill SB186

Texas 2019 - 86th Regular

Caption

Relating to the maximum permitted rate of interest, sum of fees, and other amounts due during a natural disaster declaration.

Impact

The introduction of SB186 is expected to alter the landscape of consumer credit and lending practices during emergencies. By imposing a cap on interest rates and fees, the bill directly influences the operations of credit access businesses and financial institutions in disaster-stricken areas, ensuring that they adhere to the new regulations when offering financial services. This bill is particularly meaningful as it comes at a time when extreme weather events and natural calamities are increasingly prevalent, and financial protection measures for consumers are crucial.

Summary

Senate Bill 186 focuses on establishing a maximum permitted interest rate and limits on fees during natural disaster declarations in Texas. Specifically, it sets a ceiling of 36 percent on the interest rates for loans taken out in areas affected by such disasters. This regulation aims to protect consumers during periods of heightened vulnerability, where financial stability can be severely impacted by natural events. By ensuring that loan costs remain manageable, the legislation seeks to mitigate the financial strain on affected individuals and businesses, allowing them to recover without excessive extra burdens.

Contention

While proponents of the bill argue that it is a necessary protective measure, there may be concerns regarding the implications for lending practices and the potential for reduced access to credit in affected areas. Some may fear that capping interest rates could lead lenders to tighten credit access, which could ultimately undermine the bill's intended benefits. Additionally, discussions around how these regulations will be implemented and enforced will likely arise, with stakeholders from both the lending industry and consumer advocacy groups weighing in on the potential consequences of the legislation.