Cowboy Who?

This article is co-published with ProPublica, a nonprofit newsroom that investigates abuses of power. Sign up for ProPublica’s Big Story newsletter to receive stories like this one in your inbox as soon as they are published.

A Silicon Valley-based installment lender that caters to Latino immigrants announced on Tuesday that it would drop all the lawsuits it has filed against borrowers who fell behind on payments, including during the coronavirus pandemic.

Oportun Inc. also said it would cap interest rates on new loans at 36% — a percentage that consumer advocates consider the gold standard for smaller personal loans.

The announcement came after ProPublica and The Texas Tribune began asking questions about the company’s lending and debt collection practices in Texas, one of 12 states in which it operates. That reporting has included interviews with individuals whom Oportun sued in small claims courts across the state, as well as numerous consumer advocates.

The company didn’t say on Tuesday exactly how many pending lawsuits it would drop in Texas and other states, but confirmed that “several thousand cases” would be impacted. Court records show that it has filed thousands of debt claims in Texas this year alone and tens of thousands since 2016.

“Recently, a few consumer advocates and journalists have asked us about the APRs (annual percentage rates) we charge some of our customers as well as the scale of our legal collections,” Oportun CEO Raul Vazquez wrote in a blog post on Tuesday.

“We have always designed our products and practices to benefit our customers, so we asked ourselves how we can better serve our customers, especially in the current environment, while keeping our commitments to other stakeholders,” Vazquez wrote. “After extensive discussions and with enthusiastic support from our leadership team and Board, we have decided that we can do better and I’m writing today to share how we intend to do that on a permanent basis.”

In addition to dropping all pending lawsuits, Vazquez said the company would limit debt collection activity now and in the future with a temporary moratorium on new debt lawsuits — it did not indicate for how long — and the reduction of its current filing rate by more than 60%.

While the company has filed suits related to fewer than 6% of its loans in recent years, Vazquez acknowledged it had still become the largest filer of debt claims in both California and Texas.

“This is a position that does not reflect our objectives as a mission-driven company,” he wrote.

In a statement to ProPublica and The Tribune, the company said: “We did not and will not file cases or pursue judgements for customers who informed us that they were impacted by COVID-19.”

The other major change Vazquez announced Tuesday is an “all-in” interest rate cap of 36%, a policy he said would be completely implemented by mid-August.

Some consumer advocates believe that size APR is still too high, but it is considered a gold standard ceiling for the kind of smaller installment loans that Oportun offers, which range from $300 to $10,000.

“While the average APR for our business today is about 34%, the APRs can exceed 36% for some customers, often because the size of the loan is small and the term is fairly short (less than 12 months),” Vazquez said.

Consumer advocates and attorneys praised the move, with some caveats, and said they hoped it would inspire other installment lenders, subprime and otherwise, to follow suit and possibly generate momentum for a nationwide interest rate cap.

“Oportun did the right thing by reducing their rates to 36% without any trick or trap fees, and by dismissing all of their debt collection lawsuits and pledging to work with distressed borrowers. Other lenders should follow their lead,” said Lauren Saunders, associate director of the National Consumer Law Center, who noted that 36% is already the maximum allowable interest rate for active military service members.

Ann Baddour of Texas Appleseed, a nonprofit that advocates for low-income Texans, said the rate cap “is particularly positive for residents of Texas, where some consumer loans can average 500% interest or higher.” The planned changes to debt collection practices are welcome too, but Baddour noted that Oportun would still have been a top filer of debt claims in Harris County, home to Houston, this year even if it had filed 60% fewer cases.

Attorney and professor Mary Spector, who directs the civil and consumer law clinic at Southern Methodist University’s Dedman School of Law, said: “Maybe this is a bright spot during the pandemic and, if we’re lucky, other lenders will follow suit.”

Disclosure: Texas Appleseed and Southern Methodist University have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

Need to stay updated on coronavirus news in Texas? Our evening roundup will help you stay on top of the day’s latest updates. Sign up here.

Vance Ginn, the chief economist for the Texas Public Policy Foundation, is facing fierce backlash for a recent racist tweet that said schools should open since most of the people dying from the coronavirus in Texas are elderly or Hispanic.

Before Monday, the state’s racial and ethnic breakdown of deaths had large gaps, with up to 18% of deaths last month recorded as “unknown.” A revised count of the data released Monday by the Department of State Health Services, however, shows that Hispanic Texans are overrepresented in the state’s updated fatality count.

Citing the revised data, Ginn tweeted that the people most likely to perish from the deadly virus are people older than 50 and Hispanics, whose death rate increased from 24.8% on May 27 to 47.4% on July 27. Hispanics make up about 40% of the state’s population.

Meanwhile, about 180 deaths, or 3% of the total, occurred among Texans younger than 40. About 2,000 people who died were 80 or older, making up the largest age bracket of COVID-19 deaths.

“Why not #openschools, end universal mandates, target vulnerable & check those from #Mexico?” Ginn wrote in a since-deleted tweet. He juxtaposed his tweet with a GIF of Prince Harry of Wales miming a mic drop.

He later apologized for tweeting the GIF. “It’s been brought to my attention that the gif may have been perceived as insensitive. I apologize as that was not my intention,” he tweeted.

In an interview with The Texas Tribune, Ginn said the intention of his Twitter thread was to outline the more thorough data provided by the state. He also said his tweet with the GIF was “woefully taken out of context out of bad faith.”

“What we’re really focused in on is, ‘How can we best make sure that Texans are taken care of during this time?’” he said. Given the revised data that shows demographic breakdowns, he questioned whether state and local officials should take a more “targeted approach” to combatting the virus, rather than passing blanket policies.

Ginn later removed the tweet and apologized. “I believe strongly based on my deep faith that every life is precious,” he wrote. “My intent was to highlight the positive development of more data available to make better policy decisions and help the vulnerable.”

Almost 53% of public school students were Hispanic in 2018-19 and more than 60% are economically disadvantaged, according to Texas Education Agency data. Public health experts have said schools that reopen in areas with high and fast-rising rates of community spread are likely to exacerbate the effects of the virus. That means staff and students could bring the virus home to their families.

“This is my grandfather Albert. He was an Hispanic citizen of the U.S. & passed from #Covid,” tweeted former state Rep. Jason Villalba, R-Dallas. “His grandchildren (born in Dallas) lived with him and also got #Covid. They survived. W/ great respect, the death of elderly Hispanics does not necessarily make the schools safe to open.”

Ginn, who previously served in the White House under President Donald Trump's administration as associate director for economic policy at the Office of Management and Budget, also served as senior economist for the think tank.

While children may not be the most vulnerable to contracting the virus, fear of community spread has prompted some large school districts to delay the start of the fall semester for in-person instruction.

In mid-July, Texas education officials said school districts could delay on-campus instructions for at least four weeks and ask for waivers to continue remote instruction for up to four additional weeks in areas hard hit by the coronavirus pandemic. During that time, districts must educate at least a small percentage of students in person and give the state information on what public health conditions would allow them to bring more kids into classrooms.

In recent months, the Republican Party has faced criticisms for appearing to prioritize the economy over public health, while research shows that COVID-19 disproportionally affects Black and Hispanic people.

Gov. Greg Abbott, too, has faced pushback from Democrats on his coronavirus response efforts. Although he implemented a statewide mask mandate earlier this summer, he’s been chided for a speedy phased reopening of the economy to which public health experts attribute a record number of coronavirus deaths in the state.

Aliyya Swaby contributed to this report.

Correction: An earlier version of the headline on this story referred to the Texas Public Policy Foundation as a GOP think tank. The conservative foundation is nonpartisan.

Disclosure: Texas Public Policy Foundation has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

(Space City Weather)

The 12z European model shows a landfalling storm at around sunrise on Saturday. (Weather Bell)