Rep. Frank Ferri testifies on his bill that would reform paypay loans in RI. In the background is former Bill Murphy, former House speaker, who opposes the bill.
Treasurer Gina Raimondo and Providence Mayor Angel Taveras have joined the calls for payday lending reform efforts, and both will participate in a roundtable discussion on the issue.
“The time has come to protect Rhode Islanders from the economic threat of predatory lending,” Raimondo wrote to the Senate committee that recently took up a bill on the matter. “The payday lending industry may argue that payday lending is a necessary component of a state’s economy, yet Rhode Island is the only state in New England that allows the practice. They also claim that payday loans are intended as one-off transactions, yet the majority of loans are issued to repeat borrowers.”
Taveras has been a member of the Coalition for Payday Lending Reform since he took office.
“Payday loans are debt traps that harm many Rhode Islanders struggling to keep their heads above water by catching them in an unintended cycle of high-interest, long-term borrowing,” he said in a statement. “It’s time for Rhode Island to join our fellow New England states in reducing the interest rate that many payday lenders charge and addressing the most concerning aspects of payday lending practices.”
Other participants include Rep. Frank Ferri and Sen. Juan Pichardo, who are each sponsoring bills in their respective chambers that would lower the average annual interest rate on payday loans from 260 percent to 36.
The roundtable discussion is being put on by the Coalition for Payday Lending Reform, which will release polling data on the percentage of Rhode Islanders who support reform of the predatory payday loans.
“The poll speaks to the fact that RI voters overwhelmingly support a 36% rate cap on payday lending,” said Margaux Morisseau the director of Community Building for NeighborWorks Blackstone River Valley. “It is time for our elected officials to listen to their constituents over the lobbyists and pass Senator Pichardo and Representative Ferri’s payday lending reform bill this year.”
The roundtable is Tuesday, 2 p.m. at the West Elmwood Housing Development Corporation, Westfield Lofts Community Room, 224 Dexter St. in Providence.
At 36% it makes no sense for any of these to stay operating in RI. Close the doors it doesn’t matter people will be smoking less crack because they won’t have access to cash.
Most states have usury laws that limit the interest that can be charged, usually somewhere between 6 and 12 percent. However, in the 1980′s special exemption was made for banks, loan companies and other entities due to inflationary conditions. There are more choices here than charging no interest and charging exorbitant rates that are virtually impossible to pay back. A reasonable rate of return on a loan doesn’t drown the borrower in permanent indebtedness. In fact, the problem is people don’t read the loan agreement prior to signing it. Thus, the major advice is to learn more info about the services you apply for.