Predatory Lending: How Does It Work & Why Can’t We Restrict It?

Industry lobbyists assert that without Pay Day Lenders, New Mexicans suffering emergency cash needs would be without resources. But as this post reveals, the truth is they prey on the vulnerable, and our legislators haven’t had the will to turn away from unscrupulous lobbyists like Raymond Chavez. The blog also includes calls to action to contact both Rep.Brian Egolf & Peter Wirth or both the State & Santa Fe Early Childhood Initiatives could be toast. Read on and get angry. 

action-changes-thingsAction for Today–Contact Sen. Peter Wirth Today and ask him to show leadership on this issue.  HJR 1 is expected to pass the House in the next few days. This is the bill that would increase the draw on the Permanent Fund to fund early childhood education. The action then moves to the Senate.  A key issue is whether our own Sen. Peter Wirth will “step up” to his leadership role and find a way to prevent Sen. John Arthur Smith from stopping it at the Senate Finance Committee, as he has in years past. One option may be to have Sen. Wirth call a Committee of the Whole to consider it.  But, so far, Sen. Wirth has not indicated readiness to change the standard process.  We need Sen. Wirth’s constituents to contact his office and ask that he use his leadership role to find a way to give the bill appropriate consideration by the Senate, and that we as his constituents will support him in doing so. You can contact Sen Wirth at peter@senatorpeterwirth.com or by calling at 986-4727. Best of all, stop by his office at the RH. Room 119. And while you are calling, emailing or visiting, mention SB 172 the Health Security Act, as well. That is going to the Senate Judiciary Committee Monday afternoon.

latino-infantSecond Action for Today–Contact Brian Egolf Today and ask him to show leadership on this issue.  HB 430 a bill working its way through the Roundhouse, HB 430 would take away the power of Santa Fe to tax sugary beverages as a means of expanding its early childhood programs by 1000 slots. HB430 is being advanced by the soda industry and is blatantly an effort to use their money and influence to undermine local initiatives. Whatever, you think about Santa Fe’s early childhood initiative, the principle here is preserving the integrity of local jurisdictions. But from my view, taxing sugary drinks (including foo-foo drinks from Starbucks to Kombucha) not only will fund early childhood, it will deter consumption of high-fructose drinks with zero nutritional value that contribute to diabetes, hypertension and obesity. The funding model developed by the city anticipates the reduction in consumption of these drinks in its funding model. So from an early childhood or a public health perspective, this is a good plan. Unless you are a soda industry lobbyist. Email, Rep. Egolf at brian.egolf@nmlegis.gov, call his office at 986-4782 or visit him at Room 104 in the Roundhouse. And while you have his attention, implore him to use his leadership to advance HB 101, the Health Security Act. It is going to be a tough battle on the House floor, especially with Rep. Jim Trujillo suddenly ill and unable to attend for the remainder of the session.

Volunteer needed and this is easy. I want to organize a contact list of all NM legislators and include their committee membership so we can organize contact lists for all committees. This will make it much easier to prepare these lists as bills go before specific committees. I also want to begin to send all legislators a special weekly e-blast from Retake.  All the info is on nmlegis.gov website and I can orient you to how to find and record the info. Write to me at paul@retakeourdemocracy.org. Ideally, I’d like to get this done in the next few days.

predatory-1On Monday, Feb 27, at 2pm, in Room 311 at the Roundhouse, the Corporations and Transportation Committee will hold a hearing on SB 15, Small Loan Interest Rate Caps Bill. If passed this bill would finally put a 36% interest cap on the shameful Pay Day Lending industry. But as this post and a Pay Day Lending brief done by Retake Our Democracy Activist Researcher Meg Metz reveal, NM appears to be buckling once again to a team of well-heeled lobbyists led by our very own DNC representative and former House Speaker, Raymond Sanchez.

Back in 2015, a who’s who of lobbyists looked on as Republicans on a legislative committee shelved two bills that would cap what storefront lenders could charge in interest. Former House Speaker Raymond Sanchez, brother to former Democratic Senate Majority Leader Michael Sanchez and one of New Mexico’s Democratic National Committee members, was among them.  He sat with former Republican National Committee man Mickey Barnett and longtime lobbyist Scott Scanland. From a Trip Jennings report in New Mexico In Depth:

“From May through December of last year [2015], Barnett, Scanland, Sanchez and a number of other lobbyists hired by the payday lending industry spent more than $300,000 on New Mexico’s public officials — wining, dining and contributing to the campaigns of state lawmakers, political candidates, and other elected officials, according to a New Mexico In Depth analysis of data from the New Mexico Secretary of State’s office.”  Jennings went on to quote Ona Porter, president of Prosperity Works and co-chairman of the New Mexico Fair Lending Coalition, which supports the bills that would cap interest rates at 36 percent, who didn’t hesitate when asked what she thought the effect of the money was. “They are buying votes,” she said. Click here for the full NM In Depth report.

And they are at it again.  As reported in the Santa Fe New Mexican, Sanchez and Barnett are back on the Roundhouse floor, spinning tales while raking in huge pay days themselves:  “Former House Speaker Raymond Sanchez, a lobbyist for the Consumer Installment Loan Association, told the committee how his father couldn’t get a loan from a bank when he was starting a business after World War II. He said Roybal Caballero’s bill “would wipe out loans for people like my father.”  I am guessing Sanchez would find an alternative source of funds for his father, rather than subject him to paying 400-900% interest.

“According to a fiscal impact study of HB 26, the state Financial Institutions Division has said that interest rates vary wildly in New Mexico and some are astronomical. Car title loans can go up to 456.3 percent, while unsecured installment loans can have interest rates of more than 900 percent. Secured installment loans can have interest rates amounting to nearly 5,000 percent, while “refund anticipation” loans can soar to 9,000 percent. A dozen states have laws limiting interest rates to 36 percent or less, Fischmann told the House Business and Industry Committee. “These states have not experienced economic cataclysm,” he said.”The New Mexican goes on to report that HB 26 is likely dead as the Governor would veto it in any case. But the ‘compromise’ is reported to be a 175% cap on interest rate. That is not a compromise, that is a complete capitulation to Raymond Sanchez and his lobbying pals.  Click here for the full story.

While Sanchez’s amusing anecdote about his dad may convince Legislators (or perhaps it is the hundreds of thousands of dollars in donations that are doing the trick), this report tells a far less amusing tale, one of lost cars, lost futures, and hopeless debt at the hands of greedy, predatory lenders. And we can thank the influence of lobbyists like Sanchez and the money doled out by the lending industry for their plight.

It doesn’t have to be this way, as reported by Meg Meltz, who examined a variety of sources in compiling an excellent brief. She describes how most borrowers are not seeking Pay Day Loans to respond to an unexpected emergency, that most of these borrowers have alternatives to predatory lending but seek the predatory loans because of misleading advertising that suggests loans can be repaid quickly. Metz goes on to outline how people spiral from a relatively short-term solvable situation, to a deep hole of debt that jeopardizes their financial survival. The report also includes reference to how a dozen states have eliminated Pay Day Lending entirely and how other states severely limit their operations. But not New Mexico. Click here for her report.

As the New Mexican reports, the bill may be dead, with legislators once again giving in to lobbyists. This industry preys on desperate people, sucks them into a web of unending debt that ruins lives. That New Mexico can’t find a way to pass meaningful reform is shameful. But as will be reported on Tuesday, Retake Our Democracy is paying attention, recording every vote, and preparing a report that will hold our legislators accountable.

javierRetake Our Democracy on KSFR with Mayor Gonzales.  Mayor Gonzales was my guest on KSFR with Paul on Saturday, concluding the four-part series on immigrant rights, deportation, and sanctuary. I had intended to send out the blog on Saturday morning so this would remind folks of the show, but our internet was down late afternoon. Apologies. The next series of shows will focus on money in politics, with one devoted to an interview with Steve Fischmann, NM Unfair Lending Coalition, focusing on how our legislature can be so impervious to justice that it can’t pass a bill to limit predatory lending. Other shows will include an interview with State Auditor Tim Keller, an interview with Viki Harrison (Common Cause), Bruce Berlin, founder of Money Out of Politics, NM, and an interview with two legislators from the House and Sen. But this next series will not air if the show is not continued, and the KSFR Committee will consider this next week, so see below on how you can make sure the show continues. KSFR is becoming an important partner, enabling us to broadcast weekly, adding another forum for getting the word out on important issues. So I am asking Retake supporters to consider making a donation by clicking here. And when you make the donation, include a comment at the bottom of the page saying you are a Retake Our Democracy supporter and you appreciate the show. 
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Earth Care Training for Retake Our Democracy:  Creating Solidarity. Sunday, Feb 26, 2pm-4:30pm. Center for Progress & Justice. 1420 Cerrillos Rd. Santa Fe. Limited to 50 participants! YOU MUST RSVP TO GET IN! This is going to be a tremendous training and is especially important to those of you who will be working with Retake to engage other organizations and populations. If plan to participate in neighborhood-based community conversation canvassing, you should also attend. And if you have indicated an interest in playing a leadership role in the organization, you should definitely attend. This training is part of a series of workshops designed to increase our organizational capacity to develop this movement. Solidarity and ally-ship require ACTION. Together we will share our stories, ideas, and learn tangible tools to integrate solidarity more deeply in our lives. Super concrete skill-building workshop! You will walk away with practices and actions you can take and share with others. Space is limited to 50 (and 43 of 50 slots are taken.) Click here and then click on the “Going” button to RSVP. If you do not use Facebook, reply to this post to RSVP. If you do not reply to this post or RSVP on Facebook by noon on Feb. 26, you will not be able to attend. We’ll have to turn you away!

civil-disob-1ALSO THIS SUNDAY: Legal Observer Training, Feb 26, 5pm-6:30pm pmat the First Christian Church, 645 Webber St. (Follow signs for the Fellowship Hall). The National Lawyers Guild will be holding a Legal Observer training for anyone interested either in Legal Observing under the NLG program or for their own organizations.  Legal Observing is the act of observing and documenting the actions of law enforcement at a protest, on the street, at a checkpoint, an ICE raid, etc.  The National Lawyers Guild has been training LOs for decades.  Bekah Wolf, a co-convener of the New Mexico Chapter of the National Lawyers Guild will be doing the training.  She has over 15 years of experience training legal observers and is an attorney here in Santa Fe.  Please RSVP to NewMexico@nlg.org to let us know you are coming. Space is limited to 35 and RSVPs are required.  It is highly likely that as we get deeper into the Trump presidency, different forms of non-violent direct action and civil disobedience will be called for and this is a critical training to ensure we have the capacity to conduct these actions effectively.

3 thoughts on “Predatory Lending: How Does It Work & Why Can’t We Restrict It?

  1. Paul and Roxanne, I’m out of town for a little over a week, and I just want to reflect what you’ve done with having built Retake. 1) I get to stay connected to SF and NM while away and 2) More importantly, reading the blogs actually makes me yearn to be back home so I can attend meetings, learn more, take action with my feet, not just my typing fingers and my checkbook.

    HOW COOL IS THAT???

    Great Work. Thanks to you both! Sally Butler

    >

    Like

  2. Heard back from Peter Wirth saying he does support both of these bills…. I did comment that voters are watching more than ever before. Thanks Paul and Roxanne:)

    Like

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