Most payday loans have a 13-day loan repayment deadline, in contrast to the typical biweekly paycheck, forcing borrowers to take on more debt while racking up high interest rate charges and other fees.
(Photo by Nancy Lavin/Rhode Island Current)
The end-of-session push to bring payday lending reform to Rhode Island scored a big-name backer in the form of Gov. Dan McKee.
The Economic Progress Institute, one of the leading groups calling to end the loophole that lets payday lenders charge triple-digit interest rates on short-term loans, announced Thursday that McKee had signed its petition urging lawmakers to take action on proposed payday reform legislation this year.
McKe joins a growing list of other top state and local signatories on the letter, including Lt. Gov. Sabina Matos, Secretary of State Gregg Amore, Attorney General Peter Neronha, and General Treasurer James Diossa, according to the Economic Progress Institute.
“Targeting vulnerable populations with astronomical interest rates is indefensible, and stopping predatory lending practices in Rhode Island, here and now, simply is the right thing to do,” McKee said in a statement.
Proponents describe the “predatory” practice that lets deferred deposit providers charge up to 260% on small-dollar loans, trapping vulnerable borrowers in a cycle of debt when they can’t meet the 13-day repayment deadline. Yet a 15-year effort to bring sky-high interest rates back down to Earth, mirroring policies in 20 other states, has yielded little movement at the Rhode Island State House.
So far, this year is no exception. The companion bills sponsored by Rep. Karen Alzate, a Pawtucket Democrat, and Sen. Ana Quezada, a Providence Democrat, were given initial public hearings in March and April, respectively. Since then, the legislation, which caps loans at 36% interest, has languished in committee, with no signs of advancing to the floor of either chamber for a vote as of Thursday.
House Speaker K. Joseph Shekarchi and Senate President Dominick Ruggerio remained vague when asked about their interest in advancing the legislation, especially given McKee’s backing.
“The bill is still under consideration in the House and Senate,” Larry Berman, a spokesperson for Shekarchi, said in an email Thursday.
Yet Weayonnoh Nelson-Davies, executive director for the Economic Progress Institute, remained celebratory in her response to McKee’s signature.
“EPI salutes Governor McKee for his moral leadership in seeking to end the legislative carve-out allowing predatory payday lenders to continue victimizing vulnerable borrowers,” Nelson-Davies said in a statement.
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