Providence following Woonsocket and Cranston in eliminating payday loans

But the City Council would prefer state action...

“I am very optimistic. Speaker Shekarchi and everyone in the House, they get it. I think there's leadership there that can push it through,” said Providence City Councilmember Juan Pichardo (Ward 9) to me following Thursday night's City Council meeting.

Pichardo was talking about finally eradicating the evils of payday loans and a resolution passed by the council to encourage the Rhode Island General Assembly to legislate away the legal exceptions that allow our state to remain the only one in New England to allow the predatory practice of payday lending.

“Predatory lending involves unfair or deceptive practices," said Alan Krinsky, Director of Research and Fiscal Policy at the Economic Progress Institute. "When credit unions or banks make loans, they don't do so at a loss, but they do it to help people. One of the things that categorizes predatory lending is that it's done primarily for the benefit of the lender, at the expense of the borrower,” said Krinsky. “Another thing common to predatory lending practices and products is triple-digit interest rates - interest rates over a hundred percent while most rules around lending cap interest rates at about 36%.”

Rising on the floor ahead of the vote to approve the resolution, Councilmember Pichardo recalled his time as a state senator and his efforts to curb payday loans.

“This issue has been debated and fought for over 20 years in the General Assembly, and I am a witness to that,” said Councilmember Pichardo. “I championed the issue back then and we're still unable to get rid of payday lending in Rhode Island.

"We want to get rid of payday lending... It's costing the State of Rhode Island millions of dollars. These small loans are a form of entrapment, and when the economy gets tough, for teachers, people with low incomes, and the working poor, things get too onerous.”

Woonsocket and Cranston have both passed local ordinances restricting the operation of payday loan companies in their cities, and Councilmember Pichardo has introduced similar legislation to do that in Providence. That legislation currently awaits a hearing in the Council's Ordinance Committee.

"We don't have to act locally, but we will, as Woonsocket and Cranston just did," said Councilmember Pichardo. “They no longer permit payday lending in their cities and I hope that we, in the City of Providence, can do the same.”