SENATE COMMERCE COMMITTEE HEARS TESTIMONY ON PAYDAY LENDING

FOR IMMEDIATE RELEASE                                                        Tuesday, January 29, 2008

Contact: Senator David Gottesman

(603) 271-4152

SENATE COMMERCE COMMITTEE HEARS TESTIMONY ON PAYDAY LENDING

CONCORD – The Senate Commerce, Labor and Consumer Protection Committee heard extensive testimony today on two bills – one from the House and one from the Senate – that would restore a cap on interest rates on payday and title loans.

“These predatory lenders collected fees from New Hampshire borrowers that totaled about $5 million in 2005. That’s $5 million that was not buying food for the family or medicine for our seniors. That’s $5 million in excessive interest payments going into the pockets of what amounts to legalized loan sharks,” said Senator David Gottesman, prime sponsor of Senate Bill 472.

The legislation to create a 36 percent interest rate cap has the support of the state Attorney General’s Office, the state Banking Commissioner and the New Hampshire Local Welfare Administrators Association along with many advocates for children and families. Five welfare administrators from around the state testified to the problems they are seeing with people whose small financial problems turn into a big ones by seeking out payday loans.

Pat Murphy, Merrimack’s welfare administrator, said her town spent $2,350 in the last six months to help three families who’d gotten caught in a cycle of debt that made it impossible for them to pay other bills.

“This industry is bailed out by the taxpayers of New Hampshire,” said Keith Bates, the welfare administrator from Portsmouth and president of the state Welfare Administrators Association.

Alexander Nwikina, of Manchester, told the committee he wound up rolling over a payday loan 56 times as the debt grew to unmanageable proportions. “The interest for the past two or three years kept us in perpetual poverty,” he said of his family.

In addition to Senate Bill 472, the committee also has before it House Bill 267, which passed the House by a vote of 207-124 earlier this month. Gottesman was a co-sponsor of that bill, which sets the same 36 percent cap. Gottesman’s Senate bill contains much the same language but adds a new section redefining payday, title and small loans.