Letters to the Editor

YES we can: As the chair of the board of trustees for YES College Preparatory Schools, I was thrilled to read your recent report on Houston's best public high schools ["These Kids Go to the Best Public High School in Houston," by Todd Spivak, March 2]. We are honored to be listed among such an excellent group of schools and educators. Since opening in 1998, YES has worked hard to prove the argument that low-income students can achieve at the same level as their peers from more affluent backgrounds when they are given access to the same opportunities, resources and experiences. Your top ten list demonstrates that our thesis is true.

We have developed a strategic plan to open additional YES schools in the greater Houston area -– imagine if we could double (or even triple) the number of low-income students in Houston who could receive the kind of education you describe in your report. We have a long waiting list of interested students and parents, a replicable model with real results and a dedicated staff that is focused on growth. As state legislators meet again this spring to address equitable public school funding, we urge them to consider performance-based facility funding for successful charter schools. With those funds secured, our largest barrier to growth would be removed and YES could then help more of the city's low-income youths realize their dreams of collegiate success.

Chip Cureton
Houston

Financial Times

Loan zone: The recent article on the "fringe economy" ["Eaten Alive," by Josh Harkinson, January 26] failed to mention a few key facts about payday-advance loans and the Texas regulatory environment.

While the customer profiled in the series had an extremely unfortunate financial history, she does not represent the millions of customers who use payday-advance responsibly and are thankful to have somewhere to turn when they need quick access to credit. Payday-advance customers are typically middle-income, educated working families, more than half earning between $25,000 and $50,000 annually, with 58 percent having attended college and one in five having a bachelor's degree.

While a payday loan is not the best choice in every situation, it is often the lower-cost, more desirable alternative to bounced-check or overdraft-protection fees, late-bill-payment penalties, asking family for money or taking out small loans that put personal collateral at risk. Customer satisfaction levels nationally are in excess of 80 percent, and state regulators confirm that there are few complaints. This is also true in Texas.

The article is correct in noting that the industry has grown in Texas but that few lenders operate under existing regulations capping the fee at 10 percent of the advance amount. The simple fact is that lenders cannot make short-term loans profitably at a 10 percent rate. In the last two years, three different state legislatures (Indiana, Kansas, Rhode Island) have studied the issue and enacted legislation to reauthorize the service at higher rates. Additionally, a study by the FDIC's Center for Financial Research found that it is costly to originate these short-term loans, whose default rate substantially exceeds the customary credit losses at mainstream financial institutions, and that fixed operating costs and loan losses justify a large part of the high APR charged.

The real issue in Texas is the absence of a viable state regulatory framework. As a result, consumers have been forced to do business either with more expensive out-of-state banks and credit service organizations, or with unregulated offshore Internet payday lenders and operators who disguise these loans through imaginary products such as catalog and phone card rebates and even phony land deals.

Our national trade organization aggressively promotes state legislation that preserves working families' access to small-denomination, short-term credit while ensuring them substantive consumer protections. Under a bill we supported last session (House Bill 846), the consumer profiled in your article would have paid lower rates, had limited renewal opportunities – with mandatory reduction in principal – and access to an extended repayment plan to get her out of the loan cycle.

The majority of states have enacted regulation that protects consumers and weeds out unscrupulous lenders, while allowing reputable, law-abiding lenders to stay in business. We have worked constructively with policymakers and consumer groups in other states to support such legislation and remain committed to doing the same in Texas.

Vicki Woodward
Senior vice president
Community Financial Services Association of America
Alexandria, Virginia

Scene Keening

Cram him in a van: Good article on the music scene, or lack thereof ["Band Suicide," by John Nova Lomax, February 16]. It has been a problem for struggling musicians in this area for years. It's not like NY or L.A., where a label A&R guy out for drinks one night at a club hears you and starts trying to get you on their label. Most H-town bands have to go somewhere else to try to get any recognition but can't afford to because they don't make enough money playing here to leave, and it's very frustrating.

I have a band of four dedicated guys who want nothing more than to sit in a crammed van for seven hours a day and show the country and the world our music.