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<p>CONCORD, N.H. – In a move prompted by what some called a no-holds barred letter from Providian Financial Corp. Chairman and CEO Joseph Saunders to Gov. Jeanne Shaheen, a bill that would allow for changes in credit card payment terms was quickly signed into legislation, angering some consumer groups but having the full support of the New Hampshire Credit Union League and the New Hampshire Bankers Association. At issue is Senate Bill 392 which allows lenders to alter the terms of lending agreements including changing the amount and number of minimum payments required provided they give borrowers a written 15-day advance notice. It also allows lenders to switch a borrower from a fixed to a variable rate, or vice versa, without notice. Shaheen signed SB 392 into law on May 16 one day after receiving a letter from Saunders that threatened to pull Providian’s operations out of the state. According to several published reports, Saunders wrote “while the relocation of our national bank charter would not in itself require us to close our New Hampshire facilities it would leave us without a business reason to maintain and grow our New Hampshire presence.” The new law, simply titled, `regulation of revolving credit plans,’ affects all of the state’s banks, credit unions, savings associations and trust companies and goes into effect July 17. Ironically, SB 392 was initially filed last October to study the certification of mortgage loan originators of which a Senate committee held a hearing on and passed the original version in February. The bill then moved to the House Commerce Committee in March where Providian Bank submitted a nine-page amendment, which replicates similar laws in Delaware, many noted. Before Shaheen signed the bill into law, New Hampshire did not regulate open-end credit agreements, which are typically federally regulated. Under federal law, interest rates on credit cards issued by federally chartered banks that are based in one state but operate in others are governed by the home state’s statutes. If that state has no restrictions on interest rates and fees, other states cannot impose them. New Hampshire has come under much scrutiny for having no cap on what interest rates credit-card companies can charge. “The (bill) looks fairly lenient,” Jean Ann Fox, director of consumer protection for Consumer Federation of America told the Associated Press. “They claim this is modeled on Delaware, which is widely regarded as the instigator in a race to the bottom.” The New Hampshire Credit Union League supports the new law confident that it clearly defines what the rules are. “We wouldn’t endorse a bill that goes against the consumer,” said Rob Kimmett, the league’s senior vice president of marketing. “The purpose was to create some framework for credit card operations within the state. This, in essence, is a housekeeping statute because the terms have been in place for some years.” Kimmett added that the law encourages consumers to be more careful about how they organize credit card payments and “they can come to a credit union should they need help.” It would seem an anomaly for the league and the New Hampshire Bankers Association to support such a law but indeed, both groups gave their stamp of approval. “The law puts both consumers and lenders on a firmer footing so that all clearly understand what their responsibilities are,” said Gerald Little, president of the New Hampshire Bankers Association. “This clearly delineates everyone’s responsibility.” Perhaps bigger than the passage of the law is the controversy swirling around Shaheen and her ties to Providian. According to several published reports, Shaheen received more than $20,000 in campaign contributions from Providian’s political action committee and executives in 1998 and 2000. Since 1997, Providian has donated more than $18 million in grants to the state’s affordable housing agency, into economic and community development, childcare and health and social services. Shaheen’s daughter, Stefany, is the executive director of New Hampshire Business Partners for Early Learning, a child care advocacy group that has received most of its funding from Providian. Saunders’ May 16th letter seemed to seal it for some Shaheen critics when he wrote “in time, the likelihood exists that we would find it more efficient from an operational perspective to consolidate the functions we currently handle in New Hampshire to a location more proximate to our other operating facilities, the vast majority of which are in Texas and California” – a move that some say prompted Shaheen to make SB 392 law the next day. Shaheen, who recently traveled to Mexico to meet President Vicente Fox to promote New Hampshire’s business and trade sectors, is a vocal proponent of commerce here. While the state’s finance, insurance and real estate sector employs just 5% of its workforce, it is the second-largest contributor to New Hampshire’s gross product behind the services industry. Providian has 400 employees based here. Phone calls to Shaheen’s press office were not returned by press time. [email protected]</p>

 

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