Governor, Lawmakers Shouldn’t Ignore Payday Loans | comment
In the first week of the 2022 legislative session, lawmakers introduced several bills that would lower New Mexico’s unscrupulous interest rate cap from 175 percent on small loans to 36 percent. But the Legislature won’t even be able to discuss such measures in the current 30-day session without an official “message” from Gov. Michelle Lujan Grisham.
So far, the governor has not signaled that she is ready to send such a message. In 2021, lawmakers were close to passing legislation that would have usefully curbed excessive interest rates on small consumer loans in the state. Last year’s Senate Bill 66 would have capped tax rates at 36 percent, like many other states do. The bill passed the Senate by a healthy margin. However, the bill derailed in the House of Representatives, which passed a watered-down version backed by a coalition of Republicans and Democrats — including a large number of progressives.
The bill died at the end of the session, before a conference committee met to try to resolve differences. New Mexico Ethics Watch recently published a report entitled The Big Interest in Small Loans.
We analyzed the impact retail lending companies have on their customers, how this state compares to others, the history of usury laws in New Mexico, industry campaign contributions, messages from lobbyists for these companies, and other aspects of the consumer lending business.
So far, at least three bills similar to last year’s SB 66 have been introduced into the legislature: Senate Bill 107 (by Sens. Bill Soules and Katy Duhigg, both Democrats); Senate Bill 129 (by Senator Gregg Schmedes, a Republican); and house
Bill 78 (by Rep. Patricia Caballero, a Democrat). All three measures would lower the interest rate to 36 percent.
Though the governor has paid lip service to the idea of ending high interest rates, a recent statement from her press office to reporters is not encouraging.
Her spokeswoman wrote, “We are not prepared to jeopardize the importance of the matter by bringing it to the agenda without a bona fide consensus among stakeholders, which will result in substantive action and protections for New Mexicans.”
Striving for “consensus” here, however, essentially means giving in-store lenders the power to veto laws that would effectively cut wages for their industry and still leave poor New Mexicans vulnerable.
“The longer we wait for good, sensible legislation to rid New Mexico of excessive interest rates, the longer poor people will suffer,” said Kathleen Sabo, executive director of New Mexico Ethics Watch. “We are urging Governor Lujan Grisham to send a message and let the debate begin in the Legislature.”
Tony Ortiz is a retired public official and attorney who has worked for New Mexico Ethics Watch since 2018. Steve Terrell is a retired journalist who also works on ethics in government.