Panel won’t let House vote on interest cap
The state House of Representatives will not be able to debate a bill imposing an interest rate cap on short-term loans this session, thanks to a vote in the House Commerce Committee Tuesday.
The committee voted to retain the bill – meaning it will be kept in committee until next year. If the bill had reached the floor, a heated floor fight would likely have resulted on whether to pass the measure, which effectively would eliminate so-called payday and title loan lenders – businesses that suddenly flooded the state after 1999, when New Hampshire became the only one in northern New England to lift usury rates.
The lenders offer short-term loans at a more than 500 percent annual rate, secured by either a personal check or car title. House Bill 267 would have capped interest rates at 36 percent, the same cap the federal government applies to loans offered to active-duty military personnel.
The committee also voted to retain two other bills, that called for even more stringent interest caps.
Companies like Advance America – the state’s largest payday lender – have contended that the 36 percent rate would translate into a dime a day interest on a $100 two-week loan.
Advance America CEO Ken Compton was delighted with the result, saying that committee members “have shown a willingness to explore reasonable reform and Advance America is committed to working toward our shared goals on this matter.”
However Sarah Mattson, a New Hampshire Legal Assistance attorney who has been leading a campaign to cap interest rates, was disappointed with the committee action.
Mattson said that she didn’t think the committee – which has long been hostile to an interest rate cap – would recommend passage, but she had hoped for “an up or down vote so we could have gotten this issue to the floor,” even if the committee recommended killing it.
Citing a four-hour public hearing last week, she said, “this has been one of the hottest topics in the Legislature this year. It deserves a vote on the floor.”
At that hearing, social workers from various agencies testified that they are seeing clients caught in the debt trap, but said that the clients themselves were too ashamed to go public. Meanwhile, Advance America packed the hearing room with workers who could lose their job and one customer who testified that she knew what she was doing when she took out her payday loan.
Other customers wrote or called committee members, who said they did not hear directly from alleged victims of the industry.
They also cited testimony from Bank Commissioner Peter Hildreth, a supporter of the bill who testified that there have been 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.
The committee’s chair, Tara Reardon – whose father-in-law lobbies for an industry trade organization and whose husband was on Advance America’s payroll last year — did not participate in the debate or vote on the matter. – BOB SANDERS