For the first time in 13 years, a bill to cap payday lending is on the way to a vote by the Rhode Island House of Representatives – but the legislation faces a very uncertain outlook in the state Senate, with time running down on the legislative session.
The House Corporations Committee passed the bill, sponsored by state Rep. Karen Alzate (D-Pawtucket), on a 7-to-1 vote Tuesday afternoon, with Rep. Brian Patrick Kennedy (D-Hopkinton) voting against it.
Payday lenders in Rhode Island can charge the equivalent of an annual percentage rate of 260% – a rate that critics say traps poor people in a spiral of debt. According to the Center for Responsive Lending, Rhode Island is the only New England state where consumers risk falling into what it calls “the payday loan debt trap.”
“This has been a particularly serious issue in regard to our Black and brown and low-income populations that have been financially preyed upon for years, while also being denied access to traditional banking services and credit,” Alzate said during an afternoon news conference held in the Statehouse library.
Alzate’s bill would limit the interest that payday lenders could charge to the same percentage as other commercial lenders.
Margaux Morisseau, deputy director at the Rhode Island Coalition to End Homelessness, called the Corporations Committee vote – the first to send a payday bill to the floor of either chamber – historic. Morisseau launched a campaign against payday lending in 2010 because of how it was hurting a low-income neighborhood in Woonsocket.
But Senate sponsor Sen. Ana Quezada (D-Providence) and other supporters said it’s unclear if the bill will get a committee vote in the Senate. She said she was unsure why Senate President Dominick Ruggerio may not support bringing the legislation to a vote.
“Rhode Islanders have been asking the State House for more than a decade to take action to end predatory loan practices,” said Weayonnoh Nelson-Davies, executive director of the Economic Progress Institute. “With the existing overwhelming support of residents, we expect the Senate to pass these long-overdue reforms this year.”
Kennedy said in an interview that he voted against the bill because he thinks it will put payday lenders out of business, costing jobs and uncertainty for the storefront locations rented by the lenders around the state. He said he might support an amended version of the bill on the House floor.
During a brief interview as he emerged from a Senate committee meeting, Ruggerio declined to discuss his view of the merits or demerits of the payday lending bill. He didn’t rule out the possibility of a vote, but also said he has not yet looked at Quezada’s bill – an inauspicious sign as lawmakers try to conclude their 2023 session on Thursday or possibly Friday.
For years, supporters of capping payday lending have attributed some of the legislature’s reluctance to move forward a bill to former House speaker William J. Murphy’s, whose lobbying clients included payday lending giant Purpose Financial.
In a statement, House Speaker Joe Shekarchi, said, “This legislation is important to the sponsor of the bill and many House members. This is an issue that has been talked about for many years and I support this bill, which assists those in financial need.”
Alzate’s bill is expected to move to the House floor Wednesday or Thursday.
Ian Donnis can be reached at idonnis@ripr.org
