More than 3/4 of Rhode Island wants the General Assembly to reform payday lending, according to a Public Policy Polling survey. And, according to Rep. Frank Ferri, sponsor of a bill that would reign in interest rates on such loans from 260 percent down to 36, so does a vast majority of the legislators.
“Now we just have to convince leadership that it is the right thing to do,” Ferri said at a roundtable discussion on the matter Tuesday.
He was joined by Sen Juan Pichardo, the sponsor of the similar bill in the Senate, Providence Mayor Angel Taveras and Treasurer Gina Raimondo, all of whom are adamant that payday lending be stopped.
“It’s a predatory product,” Raimondo said. “People need to know about the dangers of payday lending so they can take care of themselves. Everyone needs a loan once in a while and you ought to be able to do it in a way that is safe and reliable and doesn’t trap you.”
Raimondo said she plans to announce soon that she will be reaching out to banks and trying to incentive them to offer an alternative to payday loan shops.
“Soon we will be launching a press for information to all the banks that the state does business with and asking them to tell us about what products like this they do provide,” she said, referring to alternative loans to the predatory variety offered at payday loan shops. Once that is completed, she said, “I think you might see us giving a preference to banks that provide those kinds of services for Rhode Islanders.”
Payday loans are short-term loans secured by a post-dated check that can carry huge interest rates. Rhode Island is the only state in New England to allow the practice.
The reform proposal, which is opposed by former House Speaker Bill Murphy, has already been heard by both House and Senate committees. Here’s a video from the House hearing:
[...] state treasurer Gina Raimondo has criticized payday loans as a “predatory product,” two of her political associates have links with a check-cashing business that has offered [...]
I have used a pay day loan occasionally when a big unexpected bill pops up. I pay $36 to borrow $200 for 2 weeks. A bank charges you $35 to borrow $1 if you make a mistake doing math in your check book. Who are the rip off people here? One time I used the wrong deposit slip (my mistake) and my bank charged me $175 in fees for 5 $4 lunches on my ATM card even when I had $1600 in a savings account in the bank. Yes I made a mistake but the bank could have just transferred some money or taken 5 minutes to call me. By the way most banks have a way to make your card be turned down if funds aren’t available but you have to ask for it. Then they often “forget” to keep that feature turned on also. Better a devil you know at the payday loan place that is honest about his fees up front than your good buddy banker that will twist the knife he drives in your back when you are shaking his had in friendship.