In a 6-2 vote, City Council passed an ordinance and resolution that members said will protect economically vulnerable citizens from what they call "predatory lenders."

The new ordinance will prevent lenders from allowing customers to borrow more than 20 percent of their gross monthly income. It also reduces the number of times borrowers can refinance their loans to three times.

"It's very simple regulatory requirements that will begin to move consumers out of the cycle of debt they get trapped in. In many ways, it's the cycle of debt that is so profitable to these lenders and that is why they are concerned and alarmed," said Rep. Susie Byrd, who proposed the ordinance after years of working on fair lending practices.

However, lenders said they are providing a necessary service to people in El Paso in desperate need and are helping people who cannot get loans from banks or credit unions.

"I thought it was very slanderous to be called a predatory lender – that we are feeding off the poor people -- and that is totally, totally wrong," said Saul Frank, president of Benny's Pawn, Car Title Loan, Pay Day Advance. "We should never be told that we are doing that; we are serving the need of the people who need to get a loan, and who can't get it somewhere else."

Advocacy groups appealing to the council said the high interest rates snowball the cycle of debt for those already in need. Often, they pay upwards of double or triple what they borrowed in interest alone.

"Since they are trapped in this cycle of debt, they are just paying fees and interest to a payday lender who is not doing any more work for that loan but they are making a lot more money. It's almost a loan product that kicks people when they are down," said Byrd.

But loan companies said each company is different and they comply with state regulations.

"People that borrow have to borrow knowingly with what they are going to borrow. We advise them what is going to cost them if they borrow for two weeks or a month. We tell them it's a high interest but you are going to get the money right now but you need to pay us this amount in this amount of time and this is what it is going to cost you. If they want to continue, we will give them the loan," said Frank.

Advocacy groups, such as Texas Appleseed, traveled to Tuesday's City Council meeting to stress the need to regulate the lending companies they said keep people in a cycle of debt that they can't pay off.

"They really give people no choices but high costs, and the cycle of debt that they can't get out of," Byrd said. "And so, if they were really interested in helping consumers, they would already be doing many of the things we are prescribing in this ordinance today."

Texas is the only state that has not passed tougher statewide legislation to better regulate the industry. Last session, the Legislature failed to pass a bill that would have addressed many of the concerns that resulted in cities stepping up to the plate. El Paso follows in the footsteps of Dallas, Austin and San Antonio.

"Now, cities have had to say, well if you are not going to help us, we have to take measures into our own hands," said Rep. Cortney Niland.

The industry is regulated by the state.

"We are regulated already by the state and I think it should be in the hands of the state to regulate us. I don't think the city has any reason to be in regulations of our business," said Frank.

Some point the state's inability to pass legislation because lobbyists for the payday loan and title loan industry have poured millions of dollars into preventing that from happening.

"Texas is a huge battleground for the payday lenders," said Dallas City Councilman Jerry Allen. Allen is one of the leaders in the fight to change lending practices in Texas. He said Texas has one of the highest populations of people without bank accounts, making them susceptible to payday loans.


"It's huge, it's huge, El Paso stood up and said they will not let their citizens be taken advantage of and that is huge," said Allen.

But taking on the payday, title loan industry isn't as easy as borrowing from one. Companies are currently suing Dallas and Austin over their ordinances and El Paso could face the same fate.

But Allen said the city of Dallas has pledged its support and resources if that were to happen.

"Rest assured the city of Dallas, our attorney's office, our city attorney have made it public: we will lock arms with El Paso, with the legal staff in El Paso, any and all staff that is here and we will share our expertise that we have already learned from this," said Allen. "When we lock arms, we'll take anybody on," he added.

The city might very well need it.

"No, this isn't over," said Frank.

The ordinance is set to take effect in July.

Reps. Carl Robinson and Eddie Holguin cast the two dissenting votes. Robinson said people need to take responsibility and accountability for their own finances.