House speaker sets new policy on conflicts

When the House Commerce Committee held its public hearings on a bill that would cap high-interest loans made by short-term lenders like payday loan companies, Chairwoman Tara Reardon’s seat was empty.

Reardon, whose father-in-law, Richard Bouley, was there quietly lobbying for the payday loan industry, sat there listening, but did not say a word. He left after the first few speakers.

When Reardon last talked to New Hampshire Business Review, she insisted that there was no conflict of interest in chairing a committee that would hear a bill for which relatives were lobbying. After all, her husband, Jim Bouley, was no longer on the payroll of Advance America, the state’s biggest payday lender. In addition, her cousin, Judy Reardon, is listed as a registered lobbyist for Community Loans of America, another title loan and payday lender.

Reardon did not comment on why she didn’t chair the committee during the hearing, but House Speaker Terri Norelli said that Reardon had no choice because of a new House policy that requires committee chairs step down on issues that particularly affect their relatives, or even generally affect members of their household.

“Reardon had to abide by the policy if she was to remain as chair,” Norelli told New Hampshire Business Review. “That’s why she stepped down as chair [for the payday hearing.]”

Under the new policy, chairs can still vote on the affected legislation, and it is up to them to declare a conflict of interest if they are directly affected.

Norelli said a different standard should be set up for the committee chairs because they in particular “need to be free of any real or even perceived conflicts.”

The speaker said she developed the policy – which she described as the strictest in the body’s history – after an article in the Jan. 19-Feb. 1 Business Review (“Lawmaker says recusal unneeded on loan bills”) raised questions about the role Reardon would be playing as chair of the committee hearing legislation affecting payday loans.

But she said her office had already been formulating a new policy in response to legislation last year that forced all legislators to submit an additional disclosure form.

Norelli made it clear that the policy (which she also said should be extended to chair of subcommittees working on particular legislation) was her personal requirement for those she appointed as chairs. It is not in law, or even an ethics rule, and would end when she is no longer speaker. Whether it would be continued or not would be up to her successor.

In the end, whether Reardon stepped down or not didn’t make any difference. The committee, hostile to the idea of reimposing limits on interest rates since they were repealed in 1999, again sided with the short-term loan industry.

That action made the Granite State a New England haven for the growing payday loan industry, which made some 150,000 loans last year in the state, triple the number it made four years before.

The committee vote to retain the bill (see accompanying story), heading off a heated floor fight, which pleased Advanced America so much that the company’s chief executive officer immediately issued a statement, saying that the committee has shown “a willingness to explore reasonable reform and Advance America is committed to working toward our shared goals on this matter.”

Commerce committee members – including former chair John Hunt, R-Rindge — explained that one of the reasons they voted to retain the bill was that they didn’t hear from any customers complaining about the industry, only from social services agencies.

In addition, Bank Commissioner Peter Hildreth, while testifying for the bill because he worried New Hampshire is becoming a magnet for the industry in New England, emphasized in his testimony that he had no formal complaints from customers, only incredulous inquiries from their family members that such high interest rates were legal in the state. At the end, only four committee members voted against retaining the bill, and one did so because he wanted to kill it.

But resistance to such restrictions also could have something to do with the make-up of the House Commerce Committee, which this session has before it numerous bills dealing with health, auto and life insurance law, mortgage regulation, tobacco products, construction contracts and securities regulation.

While no other committee member disclosed having relatives working for or lobbying for the short-term loan industry, a dozen of the 20 members either own, consult for, represent or recently retired from various businesses, with eight committee members involved in the financial services or real estate industries alone.