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NH joins other states to help protect consumers against predatory lenders

State House Bureau

October 06. 2012 8:02PM

CONCORD - New Hampshire has joined 40 other states in asking the U.S. Congress to kill a bill that would preempt states from cracking down on short-term predatory lenders.

N.H. Attorney General Michael A. Delaney and 40 other attorneys general wrote a letter cautioning U.S. House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell about the negative effects of the Consumer Credit Access, Innovation and Modernization Act, or H.R. 6139.

Most of New Hampshire's pay-day and auto title loan lenders closed about a half dozen years ago when the state capped interest rates at 35 percent. Some such loans had interest rates as high as 500 percent on an annual basis.

However, in the past two years the state Legislature tried to repeal two laws that capped interest rates on loans. A bill to remove the restrictions on pay-day loans failed, said James T. Boffetti, Senior Assistant Attorney General for the Consumer Protection and Antitrust Bureau, but the bill on auto title loans passed.

'You can see these (auto title loan) places popping up again in Salem and in Somersworth,' he said.

The 35 percent cap on interest was based on what the federal government had placed on lenders outside military bases, Boffetti said.

The short-term, non-bank lenders were very popular. They targeted people who were not economically well off and, in some cases, desperate for cash, he said.

The federal bill would preempt states from regulating these types of lenders, Boffetti said. 'States should be able to enact more stringent consumer protection laws against these type of loans if they decide to do that and not be preempted by the federal government,' he said.

New Hampshire was not the only state attempting to regulate the short-term, high-interest borrowing. Many states have regulations protecting consumers from the non-bank, credit service providers.

The federal bill would allow payday lenders, installment lenders, car title lenders, prepaid card issuers and check cashers to obtain federal charters. That would allow them to sidestep more stringent state laws.

In New Hampshire, the Banking Department regulates short-term lenders.

The federal bill would exempt loans of one year or less from the disclosure requirements in the Truth in Lending Act and substitute a cost metric.

Boffetti said the letter was proposed by the Illinois AG. All six New England states' AGs have signed the letter.

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Garry Rayno may be reached at

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