Well, we may or may not ever get back to the contested races in City Council districts A, H, and I, but it does at least appear that we’ll get a recommendation on all the constitutional amendments on the ballot. Today’s featured proposition is Prop 5, which gets a nod of approval from the Chron.
The proposed amendment, with wide support from business leaders, would eliminate interest rate caps on commercial loans above $7 million. In doing so, Texas would join 46 other states that do not put caps on what banks can charge commercial customers.
Currently, Texas business owners needing high-dollar loans for commercial enterprises often must bank outside Texas because the constitutionally mandated interest cap makes a Texas loan infeasible or unavailable. Doing business across state lines means companies must employ attorneys versed in the banking laws of other states. It can require travel outside Texas to negotiate terms. If a deal initiated in another state goes to court, legal fees and interstate litigation costs can spiral.
Even when companies find a Texas-chartered lender to arrange their big-ticket loan, the constitutional interest cap drives up costs. Such deals, often entailing complex elements such as equity participation in which the lender takes a stake in the enterprise. In Texas, this requires additional legal scrutiny to avoid busting limits on interest rates. Such deals have been challenged in court when profits to the lender have been construed as interest payments above the mandated cap.
One of nine amendment proposals on the ballot, Proposition 5 would relieve businesses of these burdens and uncertainties. The proposition is narrowly tailored so that small business owners needing financing under $7 million will retain protections that exist under present law.
Consumers need not worry: the amendment will not affect loans for cars, home improvement or college.
“Wide support from business leaders” is not necessarily a good thing in my book (two words: tort “reform”), but off the top of my head I don’t see anything terribly objectionable about this. If you can give me a good reason to vote against it, leave a comment and let me know.
According to the Texas Civil Rights Review, Maria Alvarado, currently the sole Democratic candidate for Lite Gov, is advocating a vote against all nine propositions as a means of expressing discontent with the unresponsiveness of the Legislature. I don’t fully agree with this approach and will do my best to evaluate each proposition on its own merits, but I can understand it.
Today’s news coverage is on the five-way race in At Large #2. I confess, I hadn’t realized there was a fifth person in this race – I knew about Acosta, Aiyer, Elford, and Lovell, but had never heard of James Neal before now. He’s also the one candidate for whom I’ve not seen any campaign signs around. Greg has a concise summary of the article.
Later today, or maybe tomorrow morning, I hope to give my endorsements for all the races, for what they’re worth. Early voting starts today – more info is here, a map of early voting locations is here, and the early voting schedule is here.
Finally, there will be an anti-Prop 2 rally at the Metropolitan Multi-Service Center (an early voting location) on West Gray today at 3:30, along with an announcement of breaking news regarding the amendment. That’s all I know about it, so follow the link and I’ll report back when I hear more.