The Arrogance of the Rhode Island Payday Loan Industry
It’s been a while since in-person committee meetings have been held by the Rhode Island Senate in rooms without cameras, which means those hearings aren’t live streamed, or even taped, beyond a pretty bad audio recording.
UpriseRI brought a camera into room 310 last night to cover the Senate Commerce Committee which reprized, perhaps for the twelfth time in a dozen years, legislation that would repeal provisions of general statutes authorizing deferred deposit providers, also known as “payday lenders.”
The law project, S2166is sponsored by the senator Ana Quezada (Democrat, District 2, Providence), who was unable to introduce his bill in person. See some previous reports on the issue of payday loans here:
Repeal of this provision is supported by a wide range of community, faith-based, social service and advocacy organizations and activists, but opposed by a small clique of powerful, wealthy and politically connected corporate and lobbyists who are winning literally millions of dollars through their predatory lending practices. .
In his testimony in support of the payday loan resignation bill, Margaux Morisseaudeputy director of the Rhode Island Coalition to End Homelessnessspoke of doing social work in Woonsocket in 2009 and realizing that “hard working families were going to be left homeless” because the payday lender Moving America Forward had opened a store in the middle of the neighborhood in which she worked and targeted residents.
After working with lawmakers in the General Assembly to draft the first payday loan reform bill – which would have capped the interest lenders could charge at 36% per year, the bill was withdrawn from the review minutes before a scheduled floor vote “because of a phone call made by a powerful lobbyist,” Morisseau said.
In the 12 years since, lobbyists have continued to be paid tens of thousands of dollars each year, preserving the millions of dollars in profits that predatory loan companies suck from communities. A bill to stop payday loans never reached the floor of the House or Senate for a vote.
The protections afforded to payday lenders by General Assembly leaders, protections that include holding hearings in rooms without cameras, have spawned arrogance among those pushing for — and profiting from — loans on salary. Lobbyists Stephane Alves (paid $40,000 a year by a predatory lender Financial access) and former Speaker of the House William Murphy (a bargain at $30,000 per year from Financiall, doing business as Moving America Forward) don’t even bother to deliver oral testimony to the committee — at least when the cameras are rolling — they instead submit written testimony. (Murphy does better than Alves – his name doesn’t even appear on the testimony he provides. Instead, he delivered a letter from Purpose Financial’s senior policy adviser Julie Townsend.) You can read their testimonial at the bottom of this report.
These lobbyists do not testify at hearings because they do not need to. They hold the State House firmly in their hands. Hearings on their bills are held in rooms without cameras. They kill the bills with last-minute phone calls and at fundraisers with pals. They see inequality and human suffering not as an evil, but as an opportunity.
But the price of arrogance for those who testified against payday loan reform legislation at last night’s committee hearing must go to Bill Stadermanpresident of the Rhode Island Association of Financial Services Centers, which owns and operates payday loan companies across the state. Staderman presented himself as an intelligent and charming monster, but he is neither intelligent nor charming.
Staderman began by saying that payday loans were “simple” things that people willingly accept. Playing with the privilege he felt in the room, Staderman said, “I’m sure most people here, probably everyone here, haven’t gotten a payday loan themselves…”
Getting these payday loans is “quick, and it’s a small amount – the maximum in Rhode Island is $500,” said Staderman, who issued a challenge to the senator. Mack tiara (Democrat, District 6, Providence) during questioning.
“I’ve seen the financial cost, I’ve seen the generational cost, and I’ve also seen the generational cost of predatory payday lending,” Senator Mack said. “We can call them small quantities [but] $500 to someone who doesn’t make $500 a week…that’s a lot of money.
Staderman couldn’t help but respond to Mack’s powerful, factual and moving testimony with anything but condescension. “I appreciate you agreeing with what I said,” Staderman said. “Here’s the reason why: $500, I’ve said it before, it might be a small amount — I grew up in an apartment building in Brooklyn…” Then, in a kind of nondescript accent, Staderman said. continued: “$500. That’s a lot of fake money on that. Sensing he was going to be interrupted by Senator Mack, Staderman interrupted him: ‘Let me finish, please, Senator…’
Staderman then chatted for minutes and answered questions from senators Cynthia Mendes (Democrat, District 18, East Providence) and Kendra Anderson (Democrat, District 31, Warwick, Cranston). Finally, Senator Mack spoke again, trying to explain her family’s struggle with generational poverty. As tears welled up at Senator Mack, Staderman cut her off, saying, “I grew up with this, I’m sorry.”
“I’m not done,” said Senator Mack. “I’m crying, but not finished. It is difficult to…”
“My dad didn’t get a car until he was 40,” Staderman said, interrupting him again. “Or a license.”
“Yes,” said Senator Mack, who patiently elaborated further on her lived experience. She also spoke about the workers who cannot afford to take time off work to testify at the State House on matters of vital importance.
As Senator Mack left the room to compose himself, Staderman still needed the last word. He was interrupted by the chairman of the committee Susan Sosnowski (Democrat, District 37, Block Island, South Kingstown). “No, that’s enough,” she said.
Here is Staderman’s full testimony:
Here is the full Q&A session:
What none of the testimonials provided by the payday loan industry do is try to refute the arguments made against the practice by the lawyers who testify against them.
State Treasurer Seth Magazine, for example, noted that Rhode Island remains the only New England state that still allows this usurious practice. Treasurer Magaziner added that the United States Congress has banned payday loans in and around military bases because they are seen as a threat to military readiness.
Alan Krinskytestifying on behalf of going the Economic Progress Instituteraised several key points, backed by research and data, about the negative impacts of payday loans on both borrowers and the community.
- the average payday loan consumer is caught in a cycle of debt, taking out 10 loans a year due to an inability to pay the balance and ever-increasing fees;
- payday lenders increase wealth disparities by disproportionately targeting people of color; and
- nationally, 18 states and the District of Columbia have laws with price caps of 36% or less. Rhode Island is the only state in New England.
The testimony of Margaux Morisseau, mentioned above.
Testimonials in favor of reigning over payday lenders have also been the United Way of Rhode Island, Rhode Island Kids Matter and the Capital Asset Fund.