AUSTIN >> The official who oversees Texas' consumer watchdog says payday-loan customers -- not the lenders -- are responsible when the loans trap them in a cycle of debt.

William J. White says it's out of line to even question an industry that has had its practices called exploitative by many critics, including the Catholic Church.

White was appointed by Gov. Rick Perry to chair the state agency that oversees the Office of the Consumer Credit Commissioner, which is responsible for protecting consumers from predatory lending practices.

White also is vice president of Cash America, a major payday lender that the new U.S. Consumer Financial Protection Bureau last month socked with its first sanctions for abusive practices.

White didn't return calls earlier this month for a story about his dual roles as payday lender and consumer defender. But, on Dec. 12, as the Finance Commission wrapped up its monthly meeting in Austin, he agreed to answer a few questions.

"What you're doing is totally out of line," White said, as the interview wound down. "This fox-in-the-henhouse stuff is totally political."

His company and others in the industry have been accused of making payday loans to desperate people in amounts they can't afford to repay. Customers become trapped in a cycle in which all of their disposable income -- and some non-disposable income -- goes to payday lenders, critics say.

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Former El Paso city Rep. Susie Byrd spearheaded a payday-lending ordinance early this year that is on hold until the city council debates it on Jan. 7.

White was asked to respond to Byrd's claim that payday lenders in Texas profit by making people poor.

"That's really is not worth responding to," White said. "People make decisions. There's nobody out there that forces anybody to take any kind of loan. People are responsible for their decisions, just like in my life and in your life. When I make a wrong decision, I pay the consequences."

As the name implies, payday borrowers take out loans against their next paycheck or some other regular payment, such as a Social Security check, said Ann Baddour, a senior policy analyst with Texas Appleseed, an Austin-based non-profit that seeks to defend the rights of vulnerable populations.

She said the average fee on such loans is 25 percent. So if a borrower takes out a two-week loan for $400, he or she owes $500.

If, at the end of the first two weeks, the borrower can't pay, the loan is rolled over and two weeks later, if the borrower pays $100, he or she still owes $500. In that scenario, the borrower could pay $100 every two weeks and not scratch the principal amount of the loan.

"You keep paying and what you owe never changes," Baddour said.

Customers' fault?

White said many customers of his company and other payday lenders take on the loans as a result of making imprudent spending decisions.

"You have to look at the individual circumstances as to what put them in that position," White said. "Are they paying for a 60-inch TV?"

Larry Garcia works for El Paso Affordable Housing, a non-profit that helps families manage their finances so they can become credit-worthy and purchase a home. He estimated that more than half of the clients his agency works with struggle with payday loan debt.

"I don't know of anybody who took out a payday loan to go buy a flat-screen TV," Garcia said.

Instead, the clients he's spoken to have finances that are stretched almost to the breaking point even in good times.

When an unexpected expense such as a $150 car repair crops up, "to you and me, it's not an emergency. But to them, it's a great emergency," Garcia said. He said some people some have to take out payday loans so they can drive to work.

He said that last year, two clients who are sisters took out another form of high-interest loan offered by payday lenders -- against their car titles.

The sisters owned a house and one lost her job. She took out a title loan to help keep paying the mortgage. As she got mired in that loan, her sister took out a loan against her car title to service their mounting debt.

"To make a long story short, they lost their cars and their house," Garcia said.

533 percent interest

Because of the federal Truth in Lending Act, payday lenders have to report the fees they charge as part of the overall interest on the loan. Cash-America's website says the interest on its 14-day loans is 533 percent -- a figure that White claims doesn't represent the true situation.

"That's annual percentage rate," he said. "Annual percentage rates were designed for multi-year mortgage products. They were never designed to deal with short-term products. Any time you deal with a short-term product, you're going to have a distorted figure."

But White said he didn't know how much of his company's revenue comes from loans that are paid off after the initial loan and how many are rolled over. He denied the claims of Byrd and other critics that the entire business model for the Texas payday lending industry is to trap people in loans they can't repay.

"Anybody who loans money or sells a product where they don't get paid for it; all they're doing is losing money," White said. "Why would you do that?"

A report on U.S. payday lending by the Pew Charitable Trusts contradicts White's claim. It says companies such as Cash America owe their existence to loans rolled over by borrowers who can't afford to pay them.

"Lenders depend on this repeat borrowing, because they would not earn enough revenue to stay in business if the average customer paid off the loan within a few weeks," the report said.

White said he didn't know how much of Cash America's income comes from rollovers. But as chairman of the Texas Finance Commission, he oversees an office that tracks that information for the statewide industry -- the Office of the Consumer Credit Commissioner.

Baddour, of Texas Appleseed, said the commissioner has warned that the data has shortcomings.

Even so, Baddour said, under a conservative analysis of the data, 60 percent of payday loan revenue in 2012 came from rollovers.

A similar portion of the $18 million in fees from the El Paso region in 2012 comes from rollovers, Baddour said. That's 72 percent of the $24.7 million in loans initiated in the El Paso market last year.

The data also show that 30 percent of loan contracts in Texas were with borrowers who had refinanced five or more times -- racking up fees and interest each time.

"Those are people who paid more in fees and interest than in principal," Baddour said.

Federal sanctions

Last month, the U.S. Consumer Financial Protection Bureau announced that Cash America paid $19 million in fines and fees for violating rules such as lending to soldiers at interest rates higher than the 36 percent prescribed by federal law.

"Cash America extended payday loans exceeding that rate to more than 300 active-duty service members or dependents," an agency statement said.

White disputed the claim.

"To date, not a single soldier has been identified who has been disadvantaged," he said "In fact, Cash America is one of the earliest companies that put into effect things to identify and make sure when they're overseas protecting our freedoms that we were not putting burdens on them."

If interest rates greater than 36 percent disadvantage soldiers, White was asked, don't they disadvantage others as well?

He didn't respond directly and said that utility companies charge high fees when customers are late paying their bills.

"You want to talk about disadvantaging people, look at the utilities," he said.

White claimed that all the violations reported by the Consumer Financial Protection Bureau occurred in Ohio and that it was Cash America that found them.

"There were 18 items they audited," he said "They found nothing. The problems they found were revealed by Cash America. The solutions were also revealed by Cash America."

A spokesman for the Consumer Financial Protection Bureau did not respond to questions last week. But a statement it issued saying Cash America would pay $19 million in fees and fines appeared to be at odds with White's claims. Rather than cooperating, the statement said Cash America obstructed the agency's investigation.

It said that among other things, Cash America shredded documents after being instructed to stop, deleted recordings of phone calls with customers and it instructed employees to withhold information about their sales pitches.

"We are sending a clear message today to all companies under our watch that impeding a CFPB exam by destroying documents, withholding records, and instructing employees to mislead examiners is unacceptable," the statement quoted Richard Cordray, director of the financial protection bureau.

Divine opposition

Religious and charitable groups such as the Texas Catholic Conference have called for greater regulation of the payday lending industry.

Baddour said one charitable group surveyed its recipients and found that 30 percent were stuck in high-interest, short-term loans.

"When we give charitable donations, we give them to raise people up, not to subsidize payday lenders," Baddour said.

Proponents of regulations to ensure borrowers don't get stuck in debt seem to have failed to get the Legislature to pass a law and getting Perry, who appointed White to the finance commission, to sign it.

A report by Texans for Public Justice shows that between 2009 and 2012, prominent Republicans such as Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus were the biggest recipients of campaign funds from the payday lending industry. But it also showed that more liberal-leaning officials and groups such as state Sen. Letitia Van de Putte and the Texas Legislative Black Caucus also received five-digit contributions.

The Democratic candidate for governor, state Sen. Wendy Davis, is a major proponent of increased regulations and is not on the list of big recipients.

Advocates have focused their efforts on Texas cities. Last week, Houston joined Dallas, San Antonio, Austin and El Paso as major cities to pass ordinances.

There are concerns that El Paso's ordinance might be eliminated even before it takes effect.

City Attorney Sylvia Borunda Firth last week said that El Paso Bishop Mark J. Seitz has visited City Hall personally to lobby in favor of the ordinance, which limits the percentage of income that can be borrowed and the number of times the loan can be rolled over.

Seitz could not be reached for this story, but a statement by the Texas Catholic Conference sets out the church's position.

"In the teachings of our faith we have many warnings about usury and the exploitation of people," it says. "Lending practices that, intentionally or unintentionally, take unfair advantage of one's desperate circumstances are unjust."

Firth said the El Paso ordinance was supposed to take effect July 1, but was put on hold while new members of the council learned about it.

"I haven't gotten any indicators that any of them is interested in rolling it back," she said.

Marty Schladen may be reached at 512-479-6606.