New Hampshire brings a 99-year old law into the 20th century.

After 99 years on the books, New Hampshire rules that required every loan offered by a bank to be approved by a board of directors -- even though banks commonly allow officers and committees to approve such transactions -- have been rewritten.

The law in question was enacted in 1895. Two weeks ago it was amended by state legislators so that loan officers and loan committees can approve loans without the consent of their respective boards of directors.

No bank has ever been accused of violating the law. A bank not in compliance would have been guilty of a felony. A person who violated the law would have committed a misdemeanor.

Quick Approvals

In an era in which automation allows banks to approve loans in 48 hours, strict enforcement of the old law would have been "a significant pain," said Jerry Little, president of the New Hampshire Bankers Association.

Imagine a bank that closes 1,000 loans a week. "You would have to have a board of directors meet on a daily basis for some institutions. You would have to have a board of directors in the boardroom all day, every day," Mr. Little said.

To Bedford, N.H.-based Centerpoint Bank, which holds $60 million in assets, however, the issue is moot, said president and chief executive officer Philip Stone.

"If you have a structure in place which basically assures review before [the board of directors], then you are, in essence, complying with the law," he said.

Monthly Reviews

He added that his board of directors reviews all loan approvals on a monthly basis.

New Hampshire's commissioner of banking, Roland Roberge, said that any problems caused by the old law are exaggerated.

It was originally intended to make the board accountable for bank policies, he said, and not meant to "meddle" with a bank's daily routines.

It is certainly true that when the law was passed, horses were not being hitched in front of automated teller machines, but that doesn't mean that 19th-century lawmakers were behind the times when it came to efficiency.

"The law needed some clarification, but I'm not willing to admit for one moment that the New Hampshire General Court, 100 years ago, didn't know what it was doing," Mr. Roberge said.

How did this come up after 99 years? One day a lawyer discovered during an annual compliance review that the bank where he worked had violated the rules.

The bank brought the lawyer's concern to the attention of the New Hampshire Bankers Association, which lobbied state officials for the amendment.

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