Rhode Island Senate President Val Lawson said she supports a bill to cap payday lending in the state — a sign that the long-running battle to curb a practice that critics say traps poor people in a cycle of debt might be drawing to a close.
However, Lawson offered a caveat, and opponents of restricting payday lending — including former House Speaker William Murphy, now a leading lobbyist — have successfully warded off attempts to change the situation for more than 15 years.
In a statement Wednesday, Lawson said that while she personally supports a payday restriction bill sponsored by Sen. Ana Quezada (D-Providence) and is “deeply grateful for her work and her passion on this issue, I also believe firmly in the importance of the committee review process. I will be reviewing the testimony from [Tueday’s Senate Commerce Committee] hearing and meeting with the committee chairman to discuss it.”
Quezada’s bill was held for further study after a hearing in the committee.
Lawson became Senate president after the death last month at age 76 of Dominick Ruggerio, who was considered the leading legislative obstacle to capping payday lending.
In 2021, Ruggerio’s lack of interest in restricting payday lending could be seen when he was interviewed after a financial literacy event at Pawtucket’s Tolman High School.
“Haven’t even looked at it,” Ruggerio told The Public’s Radio at the time, late in the legislative session. “I didn’t know a bill was in.”
Payday lenders in Rhode Island can charge an annual percentage rate of up to 260% — more than 10 times higher than the 21% interest cap for most commercial lenders.
Top state politicians have supported efforts to curb payday lending over the years, including Gov. Dan McKee. Advocates say alternatives exist for people who can’t receive conventional bank loans.
Murphy, who makes $30,000 a year for representing the parent of payday lender Advance America, has a different view.
During a House Corporations Committee hearing in March, he argued that payday lenders do not charge 260% interest on a loan, and he called the loans “almost a last resort for people to be able to borrow money,” The Rhode Island Current reported.
In 2023, a payday-restriction bill sponsored by Rep. Karen Alzate (D-Pawtucket) sailed through the House of Representatives before dying in the Senate.
Asked about his stance, House Speaker Joe Shekarchi was non-committal: “The bill is still under consideration and I am working with Rep. Karen Alzate, the sponsor,” Shekarchi said in a statement.
Weayonnoh Nelson-Davies, executive director of the Economic Progress Institute, has emerged as an outspoken critic of payday lending — and the Senate’s lack of willingness to curb it.
She said that despite the important work Ruggerio did over the years to help Rhode Islanders, “he refused for years to allow committee and floor votes on payday lending reform, even after Speaker Shekarchi allowed votes in the House, culminating in the tri-partisan 70-2 vote in favor of reform in 2023.
Nelson-Davies added, “We are quite hopeful that under President Lawson’s leadership, there will be votes at the Senate Commerce Committee and on the Senate floor this session, and we will be advocating for reform as forcefully as we can.”
