What should be a simple new law to help New Mexico’s poorest residents is not on the legislature’s agenda.
Storefront lenders who charge a whopping 175% annual interest rate instead maintain their profit margins with the help of the state government.
The oppressive interest rate is legal in New Mexico because the state House of Representatives and Democratic Governor Michelle Lujan Grisham did not exert enough political force to lower it.
Since January 3, lawmakers have tabled bills for their next 30-day session. No one has proposed to reduce the interest rate by 175%.
Most state senators are not to blame. The Senate approved a bill last year to reduce the rate to 36% – still ridiculously high but an improvement.
Greedy and greedy members of the House then capitulated to lobbyists and lawyers in the lending industry.
A bloc in the House rewrote the bill to establish a 99% mix and
36% interest rate on installment loans taken out by people in desperate need of money.
No meeting was held to resolve disputes between Senate and House bills. The storefront lenders coveted a dead end. He kept the 175% rate on the books, immoral but legal.
At the request of Lujan Grisham, Lt. Gov. Howie Morales met with lawmakers and industry representatives in hopes of finding a compromise.
“I am disappointed that there was no deal,” Morales told me on Tuesday. “But I am also encouraged by the discussions that have taken place. “
I’m not. Showcase lenders have no incentive to lower the interest rate during informal discussions. Politicians must do it by force of law.
The Democratic-controlled House of Representatives was more concerned with alienating wealthy lobbyists than with protecting the public. Nothing will change unless Lujan Grisham announces that she wants a bill eliminating abusive lending practices.
She does not take a position. Her press secretary sent me this blustery statement on Tuesday: “We certainly support the effort, as we did in 2021, and would love to be able to find a way forward to resolve the issue – but in a session that will certainly have a busy agenda. to be dealt with in just 30 days, we are unwilling to compromise the importance of the issue by adding it to the agenda without good faith consensus among stakeholders that will translate into substantive action and protections for New Mexicans.
It’s a dense way of saying that Lujan Grisham will allow the lending industry to continue charging 175% interest until he shocks everyone by agreeing to a pay cut.
The governor does not hesitate to push lawmakers one way or another when she chooses. Lujan Grisham was in favor of legalizing recreational cannabis and she called a special legislative session to do whatever she wanted. Now she is asking lawmakers to approve a minimum increase of
7 percent for school employees.
Still, she hopes an industry profiting from obscene interest rates will change its business practices based on informal conversations.
“The governor cannot leave this decision to opponents of the 36% rate bill,” said Fred Nathan, who heads Think New Mexico, a nonprofit public policy organization. “If she doesn’t think it’s okay for low-income New Mexicans to continue paying 175% interest rates on small loans, then she needs to give the reform bill a message and make it happen.” part of its legislative program.
Senator Bill Soules, D-Las Cruces, sponsored the reform bill last year. Now he is waiting for the House to act first to reduce the interest rate.
“I’m not interested in having my name on a bill that they’re going to change 60% or 99% or something worse,” Soules said.
His idea is for the members of the House to initiate the bill and then for the Senate to clean it up.
Representative Susan Herrera, D-Embudo, brought the reform bill to the House last year. But she then joined with other members of the House in adding a 99% interest rate to the proposal.
Herrera did not respond to requests for comment on whether the House, where Democrats have a 45-24-1 advantage, is willing to reconsider the matter.
Many commercial lenders are part of national companies. The money they collect with exorbitant interest rates goes out of government.
The oppressed people of New Mexico are sacrificed pawns to create wealth elsewhere.
Instead of stopping the bleeding and ending the exploitation, most Legislative Republicans and some Democrats say the best approach is not to intervene. Let free markets work.
They ignore the fact that around 20 other state legislatures have capped most interest rates at 36% or less to protect people from financial predators.
When it comes to open markets, credit unions in New Mexico have stepped up to offer lower rates. The problem is, nonprofit credit unions are outnumbered by aggressive storefront operations with huge marketing budgets.
The existing system favors companies that bleed a customer until they break down and then take their car away for missing payments.
New Mexico lawmakers often speak of the need to teach financial literacy in schools. Members of the House are living proof that a refresher course on Capitol Hill is in order.
Ringside Seat is an opinion piece on people, politics and the news. Contact Milan Simonich at
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