The arrogance of the Rhode Island payday loan industry

It’s been a while since the Rhode Island Senate has held in-person committee meetings in rooms without cameras, meaning these hearings aren’t live streamed or even recorded, save for a pretty poor audio recording.

UpriseRI brought a camera into room 310 last night to cover this Senate Committee on Commerce which, for perhaps the twelfth time in a dozen years, passed legislation that would repeal provisions of general statutes that would allow deferred deposit providers, also known as “payday lenders.”

The statement, S2166is sponsored by Senator Ana Quezada (Democrat, District 2, Providence) who was unable to introduce her bill in person. See some previous payday loan reports here:

The repeal of this provision is supported by a wide range of community, faith, social service and advocacy organizations and activists, but opposed by a small clique of powerful, wealthy and politically-affiliated lobbyists and corporations whose predatory lending practices have made literally millions of dollars earn .

In testifying in favor of the Payday Loan Withdrawal Bill, Margaux MorisseauDeputy Director of Rhode Island Coalition to End HomelessnessShe spoke about working in community service in Woonsocket in 2009 and realizing that “hard-working families would become homeless” because they were payday funders advance America had set up shop in the middle of the neighborhood where she worked and was targeting local residents.

After working with General Assembly lawmakers to draft the first payday loan reform bill – which would have capped the interest lenders could charge per year at 36%, the bill was passed minutes before a scheduled plenary vote “over a phone call made” removed from scrutiny by a powerful lobbyist,” Morisseau said.

In the 12 years that have passed, lobbyists continue to be paid tens of thousands of dollars each year, sustaining the millions of dollars in profits that the predatory lending companies suck from communities. A bill to end payday credit has never reached the House or Senate for a vote.

Protections for payday lenders are afforded by General Assembly leadership Protections that include holding hearings in rooms without cameras have bred arrogance among those who advocate for payday lending — and benefit from it. lobbyists Stefan Alve ($40,000 paid annually by a predatory lender Access Finance) and former Speaker of the House of Representatives William Murphy (a bargain at $30,000 annually from purpose fundingl, do business as advance America) don’t even bother to give oral testimony to the committee — at least when the cameras are rolling — they instead submit written testimony. (Murphy does it better than Alves — his name isn’t even on the statement he’s submitting. Instead, he delivered a letter from Purpose Financial’s senior policy counsel Julia Townsend.) You can read their statements at the end of this report.

These lobbyists don’t testify at hearings because they don’t have to. They’ve got the State House firmly in their grip. The hearings on their bills take place in camera-free rooms. They kill bills with last minute phone calls and at friend fundraisers. They do not see inequality and human suffering as evil, but as an opportunity.

But the price of arrogance for those who testified against the payday loan reform legislation at last night’s committee hearing must be paid Bill StadermanPresident of Association of Financial Services Centers of Rhode Island, which owns and operates payday loan businesses statewide. Staderman presented himself as a clever, charming monster, but he’s neither clever nor charming.

Staderman started out by saying that payday loans are “simple” things that people take voluntarily and of their own free will. Playing on the privilege he felt in the room, Staderman said, “I’m sure most people here, probably everyone here, didn’t get a payday loan themselves…”

Getting these payday loans is “quick and it’s a small amount — the top amount in Rhode Island is $500,” Staderman said, prompting a challenge from the senator Tiara Mack (Democrat, District 6, Providence) during interrogation.

“I’ve seen the financial cost, I’ve seen the generational cost, and I’ve also seen the generational cost of predatory payday loans,” Senator Mack said. “We can call them small amounts [but] $500 for someone who doesn’t make $500 a week…is a big chunk of money.”

Staderman couldn’t help but respond to Mack’s powerful, factual and emotional testimony with anything but condescension. “I appreciate that you agree with what I said,” Staderman said. “Here’s why: $500, I said before, might be a small amount — I grew up in a Brooklyn apartment building…” Staderman then put on an unidentifiable accent and continued, “$500. A lot of money is wasted on it.” Sensing that he was going to be interrupted by Senator Mack, Staderman cut him off, “Let me finish, Senator…”

Staderman then continued to chatter for minutes, answering questions from senators Cynthia Mendes (Democrat, District 18, East Providence) and Kendra Anderson (Democrat, District 31, Warwick, Cranston). Finally, Senator Mack spoke up again, trying to explain her family’s struggle with generational poverty. As Senator Mack cried, Staderman said, cutting her off with, “I grew up with this, I’m sorry.”

“I’m not done yet,” Senator Mack said. “I’m crying, but I’m not done yet. It’s hard to…”

“My dad didn’t have a car until he was 40,” Staderman said, interrupting again. “Or a license.”

“Yes,” said Senator Mack, patiently recounting more of her lived experience. She also spoke about the working people who cannot afford the time off work to testify in the State House on matters of vital importance.

As Senator Mack left the room to collect herself, Staderman still needed the last word. It was cut off by the committee chairman Suzanne Sosnowski (Democrat, District 37, Block Island, South Kingstown). “No, that’s enough,” she said.

Here is Staderman’s full statement:

Here’s the full Q&A:

None of the payday loan industry testimonies attempt to refute the arguments made against the practice by those who testified against them.

State Treasurer Seth Magazine, for example, noted that Rhode Island remains the only New England state that still allows this usury 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 Krinskywitnessing on behalf go the Institute for Economic Progressmade several key points, supported by research and data, about the negative impact of payday loans on borrowers and the community.

  • the average payday loan consumer falls into a cycle of debt and borrows 10 times a year because they can’t pay the balance and have ever-increasing fees;
  • Payday lenders increase wealth inequality by disproportionately targeting people of color; and
  • Nationally, 18 states and the District of Columbia enforce rate cap laws of 36 percent or less. Rhode Island is the only New England state.

The testimony of Margaux Morisseau mentioned above.

Also submitting testimonials in favor of the prevailing payday lenders were the United Way from Rhode Island, Children’s Count in Rhode Island and the capital goods fund.