RI Mulls Reducing Payday Loan APR: 260% to 36%


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Rep. FRank Ferri testifies at a hearing last night on his bill that would reform paypay loans in RI. In the background is former Bill Murphy, former House speaker, who opposes the bill.

Roger Paquette works at a bowling alley in Johnston and when needed some quick cash and he didn’t know where to turn. So he took out what’s known as a payday loan. It’s a decision he now regrets, he told a House subcommittee on Wednesday.

“It’s not good,” he said. “There’s no easy way out of it, unless you get lucky.”

Paquette was eventually able to clear his debt. But not before he paid $500 in fees on his $300 loan.

His employer, Rep. Frank Ferri, a Warwick Democrat, decided to do something about it. He has sponsored legislation that would trim the annual percentage rate for a payday loan in Rhode Island from a whopping 260 percent back to the previous rate of 36 percent.

“It’s a debt trap,” Ferri said, prior to the hearing.

Ferri said the rate used to be 36 percent, before the general assembly passed a law that effectively raised the rate to 391 percent. In 2005, it was lowered all the way down to 260 percent. That’s $1,300 in interest on a loan of $500, the maximum amount allowable under by law.

There were 143,201 payday loans made in Rhode Island last year for a total of more than $53 million, said Margaux Morisseau, with NeighborWorks Blackstone River Valley, a community-building non-profit based in Woonsocket.Only 2 percent of payday loans she said go to people who pay them all back and don’t take out another one.

“Payday lenders annually drain millions of dollars from Rhode Island families, mostly to out-of-state payday chains,” she told the House committee.

Morisseau said payday loans shops typically set up in the poorest areas of the state. They are illegal for military personnel, she said, as per a bill sponsored by Rhode Island’s own Senator Jack Reed because, as she put it, “they are seen as a threat to our national security.” Because these loans turn over quickly and carry such a high interest rate, they can be very stressful for those who choose them, she added.

Industry insiders at the hearing last night say such loans are the only way some people can get quick access to cash in an emergency. So did Rep. Peter Petrarca, D-Cranston, who exchanged heated words with Ferri.

But Moriseau said at last night’s hearing, “Safe, responsible, alternative products are now available to consumers. Nonprofits and Credit Unions have created easily accessed products that meet the needs of consumers at a reasonable interest rate.”

In an email, she provided these example:

  •  Capitol Good Fund lends $2000 loans at 15% APR.  Their customers have taken out CGF loans to help get out of the payday lending debt trap.
  • West Elmwood Housing Development Corporation is piloting the “Neighborhood Loan Store” that makes loans up to $1500 at 18-25% APR.
  • Navigant Credit Union also recently launched “Smart Start” a safe, easily accessed alternative product at all of their branches. They loan $600, with a 90 day term, no credit required.

Synchronicity at SXSW


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If there is one word I can use to describe my experience so far down at South by Southwest, it would be synchronicity. On at least two occasions, I’ve mentioned people I wanted to see only to see them no more than 12 hours later, and I met a Rhode Islander working at a car company’s vendor booth!

For those that don’t know, I’m down at SXSW to enjoy the tunes and performances of some of my favorite performers and to conduct interviews for Rhode 2 Africa: Elect the Arts 2012 (R2A 2012). But for now, the pictures above show some of the fun I’ve been having with Riders Against the Storm, the Austin-based band (that used to live in RI) that I am interviewing for R2A 2012, other RI friends who are here, and some of the musicians I’ve caught, including Shane Hall, 5th Elament, and Queen Deelah.

If you want to follow other “Reza Rites at SXSW” updates, follow me on Twitter and Facebook @rezaclif. If you are interested in learning more about R2A 2012, visit www.rhode2africa.wordpress.com or follow the link below to donate toward travel, equipment, and staff supports.

Who Should Be ‘Crashing the System?’


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The recent article by Michelle Alexander appearing in the New York Times, “Crash the System,” has stirred up a great deal of interest among the activist community.  Most of the people I have heard from, however, have been those who never faced imprisonment- including many lawyers and law students… i.e., people who actually read the New York Times or have it shared with them on their Facebook wall.  Alexander’s article dangles a theory of overloading and “crashing” the criminal justice system: by everyone refusing the plea bargain and going to trial.

This crashing maneuver is nothing new to prisoners.  The article itself spawned from a conversation between Alexander and Susan Burton, a formerly incarcerated woman who has since become a trailblazing activist and organizer on criminal justice reform.  Having spoken with those who have done time in other states, I know most elements of the system are essentially the same no matter where you go.

When I was facing my own sentence, being held without bail for nearly three years, I counseled hundreds of men regarding plea bargains and trials.  I could typically anticipate the first offer from the state, what he should counter-offer, and what the state will settle on.  It was very formulaic, and a disappointment whenever someone took the first offer just to get out of the hideous conditions of pretrial detention (yet another tactic).  And there was always that guy yelling, “People need to take everything to trial.  Shut down that whole damn system.”  And there is another guy saying, “I came in alone, I’m going out alone.”

In hindsight, I could have never organized these men to refuse plea bargains and go to trial for several reasons.  First, there is something distinctly personal about one’s own sentence.  Unlike conditions of confinement that affects everyone inside, the individual sentences can range from weeks to decades for actions that have nothing to do with each other.  That early phase of confinement, in jail or “Intake,” is rife with suspicion, ego, and predatory tactics.  Nobody is prepared to take a bullet for the person in the cell next to them.

Some of the commentary I have read by activists (who do not live in Highly Policed Communities) suggest that the nation’s arrested (mostly poor People of Color) should take this on.  As if we have now found the secret method of change in a nice March On Washington and Occupy Wall Street way.  They would put the onus of changing an oppressive system on the lashed backs of the oppressed.  Sadly, due to the impotence of the American public at large, it will likely end up being just that.  Others have asked the legal community what they can do in this situation, suggesting that a lawyer holds the key to a plea bargain and could actually counsel people to take a stand.

A lawyer’s job is to arm a client with as much knowledge as possible so they can make the best decision.  This does not always happen, particularly in the world of young Public Defenders with massive caseloads.  Not only does the typical lawyer have little knowledge about the totality of the system, from police tactics to prison conditions, parole hearings to probation violations, or employment discrimination to voting rights… most attorneys would not have time to truly explain this to an accused person.

Public Defenders, AND prosecutors, need to develop an ethical standard about collateral consequences, sentencing enhancements, and reduced standard of guilt (on violation hearings) so that people can intelligently accept/reject a plea.  As of now, the accused generally hears “If you sign this, you can go home today.” Or “If you go to trial and are convicted, they will throw the book at you.”

One lawyer mentioned to me that he is currently pursuing a strategy against a sentencing enhancement by arguing how, when he was sentenced before, nobody said anything about getting extra time if he were convicted again.  Every state has “bonus” time, such as Three Strikes in California, where people can get as much as 20 years to Life tacked on “just because.”  Thus, the enhancement is often higher than all their previous sentences combined.  This is a good legal strategy, similar to the successful argument in Padilla, holding that someone cannot be deported for a prior guilty plea when they were not told that the plea can result in deportation.  Those in best position to fight a criminal conviction by taking it to trial are often facing lighter crimes at a young age.

My first plea was for marijuana possession.  Four of us were traveling in a car, we were pulled over, and the police found a bag after nearly ten minutes.  No warrant, of course.  My friends all had families to report to, so I claimed it to be mine.  When I went to court, the Public Defender met me in the hallway and never mentioned the Fourth Amendment.  Instead she explained how if I pay a few hundred dollars the charge will go away if I stay out of trouble for a year.  And I won’t have to do any time on it.  Up until that point, I had contact with the police just about every year since I was 11 years old.  It did not seem to matter to her whether or not I might have contact over the next year.  This was a standard deal.  Bargaining was not a concept in this plea.

My second plea, within a year of the last, was slightly more complicated, as they offered me five years suspended and five years probation.  Same procedure in the hallway, but I insisted two things: I didn’t steal the car, and I was not intoxicated.  The prosecutor amended the charge to Receiving Stolen Goods Over $500, and kept the sentence.  I took it.

Many years later, when trying to get a driver’s license, the DMV told me I was convicted of refusing a breathalyzer.  I felt this was ludicrous considering the police brought me unconscious into the hospital after a car wreck.  But it was too late to challenge this, so I was told.  The total tab to get back on the road was over $3000, including DWI classes and extra insurance.  And yet today, this little bonus conviction doesn’t even show up on my record.  Such is the ways of the system.

My final plea is the most telling.  I called their bluff.  I knew what I was actually guilty of, under law, and they initially agreed to this, and would ask the court to impose the maximum sentence.  When I went to court for the official sentencing, they pulled the rug out and wanted a more severe charge. Apparently the Attorney General wanted to keep his statistics up.  I demanded a trial.  I told my lawyer, “Going through life as a convicted murderer is likely to be much different than being labeled a convicted manslaughterer.”

My lawyer asked what I would take on second degree murder.  I told him 15 years.  He said they would never go for it.  I said “get a jury, let’s go to trial.”  He started to explain how summer was coming, nobody wants to do trials, people go on vacation… I reminded him I had been held without bail for almost three years.  I wanted my “Speedy Trial,” which is supposed to be within 180 days.  My lawyer went back upstairs.

The guys in the holding pen were scared for me.  “Man, you’re rolling some big dice.”  The few who knew me had to remind me I knew the law and wouldn’t get rolled over.  Manslaughter itself carried up to 30 years, and I knew if I lost a trial I would get just that, and hopefully be out in 15 or 20 on parole.  I would rather get 30 for manslaughter than 25 for murder.  I knew it would have a domino effect on my entire life.

It only took about fifteen minutes for my lawyer to come back down.  The prosecutor was going to ask the court to impose 25 years for second degree murder- they knocked off five.  If I pled guilty, the judge could still do whatever he wanted.  If he went higher, naturally I would have screamed out in the courtroom about “fraud, deceit” and other such things that would get my “plea” thrown out.  Upstairs, the prosecutor who previously recommended a manslaughter conviction, labeled me before the court in as vile terms imaginable.  He could have said the same things about Osama bin Laden, as there really isn’t much else to say.  After hearing statements all around, the judge gave me 45 years, with 20 years to serve.  I didn’t scream out, or anything.  I was already numb.  That chapter of my life was officially over.

Two decades later and I can say with certainty that the label on me does not rest.  The label says nothing about what I actually did, but its easy for journalists and others to use- people can attach a set of images and presumptions to it.  My lawyer was not overly concerned about this label, nor any collateral consequences.  A nice enough guy, it just wasn’t in the cards to discuss anything other than the actual number of years in prison.  We did not talk about life on parole, or on probation, and how that will impact me.  Ultimately, even a Jailhouse Lawyer like myself who spent years studying the rules of evidence and constitutional provisions, did not make a fully informed choice regarding my plea.

The eighteen year old me could have been part of crashing the system.  I had a perfect case for trial that carried a light sentence overall.  A good lawyer would have taken the extra hour to get it dismissed.  A good lawyer would explain to young people that if one takes the statutory maximum sentence, suspended, and goes home today on probation, they are very likely to serve at least five years on that probation violation… because something is likely to happen between ages 20 and 30- particularly in Highly Policed Communities amongst my Black and Brown brothers and sisters.  The nineteen year old me, facing serious charges, needed the benefit of those who keep the system in check.  Unfortunately, I’ve found that those without criminal records are waiting on me to keep the system in check.

Error Makes Projo Explain Doonesbury Decision


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Thanks to a “production error,” the Providence Journal ended up giving us an explanation for why it didn’t run Garry Trudeau’s Doonesbury cartoon that deals with the Texas abortion law.

This item was in today’s Corrections:

“The distributor of Doonesbury this week offered to newspapers nationwide a choice of two comic story lines. The creator, Garry Trudeau, had drawn a weeklong series of comics focusing on the abortion debate in Texas. Upon review, The Journal elected to use the alternative strip because we believed it was more suitable for our comics page audience. The alternative appeared Monday through Wednesday. Because of a production error, Thursday’s comics page carries the strip that focuses on the Texas debate. The alternative strip will resume in Friday’s Journal.”

Not sure why they couldn’t have told me that when I asked on Monday, but here’s my original story on the controversial comic, and the way I was treated by two editors there when I called for comment.

Woonsocket, and How Chafee’s Muni Bill Can Help


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Woonsocket High School (photo courtesy of Woonsocket School District)
Woonsocket High School (photo courtesy of Woonsocket School District)
Woonsocket High School (photo courtesy of Woonsocket School District)

The Woonsocket School Committee voted last night not to close schools early, which is good news all around. But guess what? Schools were never going to close early. If Woonsocket can’t come up with the money it needs to run them by April 5, which it probably cannot, the state will step in and keep the schools running. The state Constitution says it has to.

Furthermore, under the new state education funding formula, RIDE has all but admitted that it shortchanged the cash-strapped city under the previous funding formula to the tune of $4.6 million, an amount the state will pay to the school district over the next seven years. Woonsocket, along with Pawtucket, is suing the state saying it needs that money right away. Obviously, this isn’t a bluff.

Yes, Woonsocket could have managed its finances better. A lot better. But the state mismanaged how it funds education, too. Couple these blunders with the drastic cuts to cities and towns that occurred over the past several years and you have the recipe for disaster that was cooked for Woonsocket.

Governor Chafee’s municipal aid bill will help. It will not only allow cities and towns to save money by cutting annual pension increases for retirees, but Chafee said on Tuesday it will also allow Woonsocket (and Providence, Pawtucket and West Warwick) to ignore some of the state mandates that drive up expenses.

Providence Journal State House scribe Randal Edgar, who evidently obtained a copy of the legislation, has a little more on what those are: mayors and managers would be given the power to veto line items in school budgets; teacher pay increases will be suspended, bus monitors can be replaced with cameras and allow those communities to stop busing students to private schools.

But at some point, and hopefully sooner rather than later, this state has to come to terms with the fact that top-down policies adopted during the Carcieri era, and a seemingly utter disdain for its poorest communities, has created this problem to a far greater degree than have unfunded pension liabilities.

Budgeting for Disaster VI: DMV Manages for Success


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FY2013 budget

FY2013 budget

One part of the Department of Administration that gets a lot of press is the Department of Motor Vehicles, which is actually a unit of the Department of Revenue. DMV, of course, gets press because people don’t like it, and the lines are long, and it’s in an inconvenient place, and so on and on.

Over last spring and summer, the agency saw a turnaround. Spurred on by stories of multiple-hour wait times, Governor Chafee appointed a new director, who made some management changes, shuffled people around, re-engineered the lines, put “greeters” out front to explain things, closed some satellite branches, and generally shook things up. Lo and behold, the wait times plummeted. An inspiring tale of how good management can make all the difference? A story of re-inventing government to do more with less in the 21st century? Well sort of, but not quite.

Watching the ticking clock in line at DMV has been a part of life for all of us in Rhode Island for a long time, but it’s not right to say that it’s been a neglected problem. Lincoln Almond suggested adding $300,000 per year to expand their hours, and Don Carcieri made a point of “fixing” it, too. He even listed new efficiencies and reduced wait times as one of his accomplishments in a 2004 interview.

But time went on and service decayed until it took hours just for routine business to happen. I waited there with my daughter for three excruciating hours one fine day in 2010, along with about three hundred good friends. By the time Lincoln Chafee took office, DMV was a joke, a travesty of government service. Chafee brought in a new interim director, Lisa Holley, to troubleshoot the agency, and — what do you know? — she got results. Wait times shrank dramatically and while it’s still hard to describe a visit to the DMV as a pleasure, the last time I was in one, last August, I was in and out in 25 minutes.

So what happened? What management magic did Holley bring to the agency? What lessons can we learn? Mostly just that it takes people to do the work.

In the dark days of 2004, when Don Carcieri was taking credit for improving wait times, he was adding employees, and adding satellite locations. You can see the progress in the graph to the right, which counts customer service representatives in the department. Service got better with the new workers, and a little worse with the satellite offices. But then around 2006, Carcieri decided it was ok to let the service decay a little bit. He said the state had too many employees, and he started to enforce the statewide hiring freeze on DMV. And then the retirement fiasco of 2009 came, and a bunch of people left, and so in 2010 you had all the satellite locations, and 22% fewer people to stand behind all those desks.

And that’s the crazy thing about management by attrition: you don’t get to plan for the loss of people. Carcieri simply said we’re not hiring any new people and we’re going to encourage people to retire, and that’s that. The only surprise was that people were surprised that service suffered — a lot.

So again, what management magic did Holley bring? She insisted on having more people, that’s what. Chafee asked the Assembly for 25 new workers. They balked, but they did cough up some, and so now there are almost as many people on the customer-facing staff as there were in 2006, at half as many locations. Of course there were some other improvements: line management systems, those greeters, a redivision of labor. But sometimes the big story is the simpler one: we got better service with more people.

There is another story I see lurking here. Governor Chafee saw a problem of poor service and acted to fix it, while Governor Carcieri saw the problem in terms of taxes, and acted to fix that instead, mostly by giving tax cuts to rich people. How did that work out for you?

There is one other feature to the DMV budget that should not go unremarked while we’re here. The RIMS computer system that was supposed to create a whole new class of efficiencies by getting all of DMV’s information about you in a single database is quite a bit behind schedule and over budget. This is pretty much SOP in the database development world, public and private. That is, it’s a shame and a waste of state dollars, but it’s not exactly unprecedented. I bring it up at least in part because you can’t exactly see it in the budget presentation, but you can see it in the Capital Budget, which we’ll get to soon.

NEXT: The Quasi-Publics
Read the previous posts in this series