COMMERCE COMMITTEE RECOMMENDS INTEREST CAP ON PAYDAY LOANS

FOR IMMEDIATE RELEASE                                                      Thursday, February 7, 2008

Contact: Senator David Gottesman

(603) 271-4152

COMMERCE COMMITTEE RECOMMENDS INTEREST CAP ON PAYDAY LOANS

CONCORD – The Senate Commerce, Labor and Consumer Protection Committee voted 4-2 today to recommend passage of legislation setting an interest rate cap on payday and title loans.

House Bill 267 sets a 36 percent interest rate cap. That bill already passed in the House. The Senate Commerce Committee made one small change to the effective date. The House bill sets the effective date at 60 days after passage and the Senate committee voted to amend the bill to create an effective date of Jan. 1, 2009. Commerce Committee Chairman David Gottesman said 60 days was not long enough for borrowers to close out existing loans or for workers in the payday industry to deal with the impacts.

“I’m pleased that the bill left the committee with a positive recommendation. This legislation provides important consumer protections for our most vulnerable citizens, especially as costs rise and more families are feeling the squeeze in this economy,” Gottesman (D-Nashua) said.

Re-establishing an interest rate cap in New Hampshire and protecting consumers from predatory lending has the support of the New Hampshire Council of Churches and Roman Catholic Bishop John McCormack. Other supporters include the state Attorney General’s Office, the state Banking Commissioner and the New Hampshire Local Welfare Administrators Association.

The committee also discussed Senate Bill 472, which set the same rate cap but includes new definitions of payday, title and small loans as requested by the state Banking Department. Gottesman, the sponsor of the Senate version, said he will let House Bill 267 move forward with the 36 percent interest rate cap and keep the new definitions in Senate Bill 472.

He said he will add a new section to Senate Bill 472 at the request of Senate President Sylvia Larsen creating a commission to look at how best to ensure emergency loans are available to consumers without the exorbitant interest rates charged by payday and title lenders. Several credit unions in New Hampshire already offer or are about to offer short-term loans with better terms for consumers.