Lynn pawn rate debate remains a touchy topic

LYNN – Almost one year has passed since the controversy surrounding the city’s steep pawnbroker rate captured the attention of the State Banking Commission but a solution has yet to be reached.Last May, local brokers received notice that the 10 percent rate they had been charging for a number of years would be reduced to a paltry 3 percent, which angered brokers and City Councilors alike.A battle then ensued between the Council and the Commissioner of Banks, who threatened the city with enforcement from the Attorney General’s office if immediate action wasn’t taken to lower the rate to 3 percent.After attempting a compromise with a rate of 4 percent, the city has been patiently waiting to hear a response – up until now.A tentative date of May 6 has been set for a public hearing at City Hall for the Commissioner of Banks to discuss the rate with local pawnbrokers.Eager to settle the dispute, Ward 3 City Councilor Darren Cyr, who continues to maintain his argument that the 3 percent rate is far too low, said the issue boggles his mind.”Think about it, how can anyone survive by charging that low of a rate,” he asked. “The bank said 10 percent is an exorbitant fee, but it’s really like making pennies.”Cyr said he is also still confused as to who exactly has the authority to set the rate.”The legislature says the city has the right and then the banking commission just approves or disapproves it,” he said. “It really comes down to a power struggle.”Alan Sherman, owner of A&S Pawn & Used Jewelry at 433 Washington St., said he has been abiding by the 4 percent rate since the Council voted on the compromise last year.”As far as I know, we were all supposed to change to the lower percent, but the Average Joe is still happy to get what he can get to have his jewelry be babysat for in exchange for money,” he said. “How many places can you go and borrow money with jewelry?”Thinking back to the days when his father ran the shop, Sherman said 3 percent was the standard charge in the 1940s, 50s and 60s, but that figure is almost laughable now.”I think it’s kind of crazy to be changing the rate to 3 percent now in these times,” he said “The Banking Commission should have better things to do besides picking on the minority of about 200 pawnbrokers in the state.”City Council President Tim Phelan previously said that while rate requests of 5 percent and higher has been denied in the past by the Banking Commission, 4 percent has never been suggested and may stand a chance of being approved.The city of Salem was recently denied a 10 percent rate, while Peabody and Revere were approved for a 3 percent rate.Looking forward to the upcoming hearing to reach a conclusion, Phelan said he had anticipated a quicker response from the banking commission.”I’m honestly surprised that it has taken so long,” he said. “It’s definitely a little odd.”Calls placed to the Banking Commission were not immediately returned Thursday.