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Rhode Island Payday Lending Reformers Call Foul

Wednesday, July 10, 2013

 

Proponents for payday lending reform clashed with House leadership over a “false compromise” during the recent General Assembly session on legislation to curb the 260% interests rates offered by the short-term loan storefronts

Margaux Morriseau with the Coalition for Payday Lending Reform said, “We had many conversations and emails with House policy staff. A compromise was reached and both sides thought it was reasonable. Both sides agreed on it.”

But at the eleventh hour, in spite of the coalition’s best efforts, the proposed legislation was never added to the calendar. In a press release, the coalition stated, “The Rhode Island General Assembly once again bowed to the powerful payday loan Industry and gave them veto power over legislation that would have benefited thousands of Ocean State families.”

Discord Behind Closed Doors

Larry Berman, spokesman for Speaker Fox, said, “You obviously have incorrect information because no deal was struck that would enable any Assembly members to ‘sign on’ to a bill.” Berman was referring to language in a press statement released on Tuesday, July 2, 2013 by the coalition.

The press release read, “More than 70 legislators signed on to Rep. Ferri and Sen. Pichardo’s reform bills because they heard and understood the stories of working families trapped in the crippling cycle of debt these companies perpetuate. It is clear that that the votes exist in both chambers to send these bills to the governor - making leadership’s last-minute efforts to block them an example of State House politics at its worst.”

Berman countered, saying, “If a compromise had been reached, Speaker Fox would have gladly put forth an amended bill for House members to consider. Since no compromise was able to be attained, it is Speaker Fox’s position that there will continue to be discussions among all parties in the next session. There has been a great deal of time and energy that has gone into working with everyone involved, and that concerted effort will continue.”

Morriseau disagreed with that saying, “We were satisfied with what the staff had put forth.”

The payday lending advocates, most prominently represented by international lending storefront giant, Advance America, hired Former House Speaker, Bill Murphy, as their lobbyist. Murphy is an experienced defense attorney and, even out of office, maintains a powerful political presence. Furthermore, Murphy endorsed Gordon Fox in his bid for House Speaker.

The Lost Legislation

The bill, sponsored by Representative Frank Ferri with paired Senate Legislation sponsored by Senator Juan Pichardo, was designed to reduce predatory short-term loan interest rates from 260% to 36%.

Ferri testified before his own House Finance Committee early last month calling out the payday lending business community using descriptors such as “loan sharking” and “carpet bagging.” He went on to say that an initial loan of $350 could turn into a debt of $1260. “This,” he said “is gouging.”

Some of the names that made up the lawmakers who agreed to support the legislation, had it made it to a floor vote, were Representatives Joe Almeida, Maria Cimini, Teresa Tanzi, and even Republican House Minority Leader, Brian Newberry, who told GoLocal, “I just think the payday lending industry takes advantage of people and is a way to evade basic usury laws, which is why I co-sponsored it.”

And, although she could cast no vote, Rhode Island’s own national financial celebrity pol, General Treasurer Gina Raimondo, had supported payday lending reform from the beginning and testified in favor before House Finance.

Raimondo scolded the practice, saying, “It hurts families and the economy.”

Raimondo went on to say that the state is “reeling from the lack of regulation," explaining the dangerous cycle of the practice: A person takes out a loan using an ID and proof of income. The person leaves a dated check. If, after fourteen days, the person defaults, another loan is taken out to cover the first one and so on.”

Future for Reform?

This is the third consecutive year that such legislation has been proposed -- and it is also the third consecutive year any form of this legislation has failed to make it out of committee. The 2013 session was notable in that there were months of discussion and many high-level meetings about compromise.

Morriseau, on behalf of the coalition said, “The Rhode Island Coalition for Payday Lending Reform is growing in support and looking for more ways to get involved with campaigns and expanding political and grassroots support.”

For now however, according to Newberry, “I fear the payday lending bill continues to sleep with the squid.”
 

 

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