We drove to Amarillo on Tuesday for our second vaccine shot and yesterday both of us were waylaid by mild flu-like symptoms. Today we’re back with updates on NM counties opening up and an interesting take on how lobbyists led to Alcon’s disastrous amendment.

Thoughts on Getting Our Vaccines in Texas

From the map above, we can see that statewide we are emerging from a year-long quarantine with all trend lines pointing consistently in the right direction. Santa Fe achieved Turquoise designation in the latest state health department release, among 13 NM counties who now are turquoise. Green counties increased from seven to ten; yellow counties decreased from 18 to 10 and there are no longer any red counties in NM.

With news video of partying spring break students packed into clubs and beaches, it’s clear that there will be spikes. In Texas and many other states, Republican governors are banning local jurisdictions and businesses from imposing mask requirements. I suspect that as compliant states continue to reverse the curve and open more venues, we may see those compliant states losing patience with states that are non-compliant and experiencing spikes or limited progress, perhaps even imposing travel restrictions for those seeking entry into NM from non-compliant states like Texas. But for now, let’s celebrate. The daily case counts, hospitalizations, and death counts are clearly plunging wherever social distancing, mask use, and effective vaccine programs are in place. Speaking of vaccinations….

We had mixed thoughts about foregoing New Mexico’s priority system and heading to Texas. Were we jumping ahead of folks who are at greater need than us? With New Mexico being touted as the among the most effective states in rolling out the vaccine, why not just sit tight and wait our turn? We have friends who are sitting tight and waiting their turn and others who have made the trek to Texas.

From folks we know who had gone to Texas we were told that Texas had more vaccine doses than Texans interested in getting vaccinated, so a month ago we went to Amarillo for the first vaccine and Tuesday we returned again for shot # 2. While it was crowded on our first trip, when we returned on Tuesday there was no line at all and 25 nurses standing around waiting to give shots. Our nurse told us that the demand was so low that starting Monday, Texas would be offering vaccines to anyone over 18 with no pre-existing conditions needed. Ironically, after hoping NM would lower eligibility to 65 and Roxanne and I could qualify , that occurred the day we returned from getting our second shot in Texas. But we’ve heard that appointments are hard to get. So for those of you 18 and older, I recommend the trip to Texas. You are not taking someone else’s dose, and if more New Mexicans do this, it will solidify our move to Turquoise.

I just hope that the majority of Americans honor mask and social distancing requirements and that aberrations like those in Florida this week will be infrequent and offer evidence of just how deadly mass, unmasked gatherings can be. I hope that as many of us begin to emerge from quarantine we do it safely, and that our counties don’t start experiencing spikes in cases. But for once, things are looking very different on the Covid scene. What a year.

How SB 66’s First Disastrous Amendment Likely Came About

Over the years, I’ve gotten to know Rep. Eliseo Alcon somewhat, as his seat in one of the committees on which he served was on the end of the dais, right near where I always sat. We would often chat between bills being heard. In conversation with other legislators it is clear he is liked and respected. In a review of his campaign contributions, there was no sign of major industry influence aside from donations from AT&T, mostly donations from individuals. He is not in the pocket of the lending lobby.

And yet, last week he introduced a bill amendment that very obviously was crafted by the storefront lending lobby. He introduced the amendment acknowledging that he really knew nothing about money, didn’t understand it, and couldn’t manage his own checkbook. His words. He also acknowledged he wasn’t sure where he came up with the 99% rate cap he proposed. It quickly became clear where the 99% came from.

I wondered how a decent legislator could introduce such a heinous amendment when the bill had passed easily and without amendment through the Senate and another House Committee and was at that moment one vote away from the House floor.

The originally proposed 36% rate cap is likely one of the most popular concepts in the entire state, as a Morning Consult poll from 2020 found that fully 71% of New Mexicans favor a 36% rate cap and two-thirds of those who are opposed want a rate lower than 36%. And yet, it got derailed in House Judiciary and then again on the House floor. House Judiciary is one of the most reliable committees in either chamber, well managed by Chair Rep. Gail Casey and enjoying an 8-4 Democrat-GOP advantage. This is not where anyone anticipated problems.

What’s more, in previous hearings the lending lobby’s assertions that there are borrowers with bad credit desperately seeking loans without a lender available, had been consistently rebuffed by effective testimony from the credit unions. So the industry’s contention that they were meeting a critical need had been completely undermined.

What’s more, industry testimony never produced any evidence that this person in desperate need of $500 and without loan options even exists. With Credit Unions throughout the state ready to make the loan needed by this individual, is there really a need to be addressed by predatory lenders?

In previous hearings, credit unions testified that smaller loans are readily available at any of their branches. The predatory lending industry made it seem that there were huge swathes of NM without access to credit unions, but in truth there are 41 credit unions with headquarters in New Mexico providing banking services from more than 150 branch office locations as of March 2021. New Mexico credit unions have a total of 953,822 members with over $14.35 Billion assets. It is not a small operation.

More to the point, if there is a need, a 99% loan seems an inherently unjust solution. Rather than addressing a short-term financial crisis, it ensures years of crisis. It is akin to throwing a drowning man a lead life saver. The man may need assistance, but not of this kind. Finally, with 15 months until the bill would be in place, there is plenty of time for credit unions and the state to verify if a gap actually exists and to seek alternative solutions, if needed. For example, could the State Investment Council, sitting on billions in state reserves, create a small pool of funds used to guarantee high-risk loans by credit unions? Suppose that credit unions offer 1,000 $500 high-risk loans and half of them are not repaid, that is $250K a year to essentially solve a pernicious problem statewide. That is far better than offering lead life savers. What’s more, in North Dakota, the State Bank offers high-risk loans to small businesses without being inordinately concerned about whether the loans are all repaid because the rate of failure to repay is so low. The State Bank figures it is more important to inject funds into local communities in support of small business ventures than it is to ensure 100% repayment. The same principle applies in NM in relation to high-risk loans to individuals. I suspect the repayment rate on these loans would significantly exceed the 50% rate projected above. So there are lots of options that don’t include predatory 99% rates.

So how could Rep. Alcon have introduced such an amendment and derail years of progress? We were almost to the finish line. For days I’ve wondered how this could have come about.

I can almost see how the situation could have played out before the hearing. Let’s say Rep. Alcon had been contacted by someone in the storefront industry, a lobbyist who Rep. Alcon knew for years from appearing in committee hearings on reforming the lending industry. This lobbyist calls Rep. Alcon and lays out the problems faced by individuals with bad credit and unable to secure emergency loans. Egged on by the lobbyist, Rep. Alcon asks, “Isn’t there something we could do to amend the bill to address the needs of these people.” The question emerged from genuine concern for this person needing $500, and the lobbyist had the amendment ready at hand, an amendment that not only afforded the industry a path to 99% lending rate, but even more to the point, entirely gutted the bill of its anti-evasion consumer protections. In effect, the amendment had not just undone the 36% cap rate, but also the 175% cap rate from the 2017 legislation. If passed, we were back to square one–no cap at all.

This kind of influence is achieved by a lobbyist who has a pre-existing relationship with a legislator from years of being at hearings on lending bills. The legislator desperately concerned to find a solution to a problem and without staff to explore options turns to the lobbyist who is all too eager to offer the solution. He has an amendment and can even serve as Alcon’s expert witness to defend it. No big campaign donation or expensive dinner needed, just familiarity borne from years of lobbying presence in the Roundhouse.

Just for a moment, consider if Rep. Alcon had had a trusted staff member to turn to instead of the lobbyist. The staffer does some research and returns to Rep. Alcon with information about how the 99% rate would only ensure sustained and increasing debt and interest costs that would be far in excess of the $500 borrowed. Suppose the staffer also found that the amendment had a poison pill that eliminated consumer protections. Finally, the staffer affirms that the testimony of the credit unions is valid, that they operate throughout the state and offer these loans routinely. The industry has vastly overstated the problem and perhaps has invented it entirely.

Now, Rep. Alcon recognizes that the amendment offered by the lobbyist was bogus and he had been played. If Rep. Louis and Rep Cadena had paid staff they, too, could have been offered the same info received by Rep. Alcon. The committee hearing would unfold in much different manner in this context.

My sustained interest in this bill is due to it so clearly manifesting the power of lobbyists in the Roundhouse. In 2017, a bill to reduce the lending rate to 36% was amended in the last weeks to create an obscene rate cap of 175%. And this was viewed as a win, as at least some “progress” had been achieved in the face of an industry that had fought off efforts to pass lending reform forever.

So what can be done? We press to have SB 66 on the Special Session Call

It might be argued that SB 66 could just as easily be put on the call in the 2022 short session, as the effective date for SB 66 is July 2022. But in a short session with a focus on budget, it would be very easy for such a bill to again run out of time. In the special session with just 2-4 bills on the call, SB 66 would get the attention and time it deserves and with good information in legislators’ hands, it could get to the Governor’s desk.

We ask that you continue to contact the Governor and ask that she put SB 66 on the call for the special session. We have a chance to finally pass this legislation and Retake, Think NM, NM Law & Poverty, NM Voices for Children, and other justice-seeking advocates are pressing the Governor to put the bill on the call while working with individual legislators who Speaker Egolf asserts would not support a 36% rate cap. Our ally conversations with House Reps indicate that we have at least 37 votes in favor of a 36% rate cap, enough to pass the House. What’s more, there are many other legislators who, if provided the information outlined above, could easily join in voting yes.

A 36% rate cap was one of the Governor’s stated priorities for this session. It didn’t quite make it. But with a re-election campaign coming, the Governor has an opportunity to deliver on one of her top legislative priorities. So, while the Governor does not want to put a bill on the call that will consume inordinate time and then fail, there is considerable political capital to be gained by getting SB 66 to her desk.

To make that happen, we need two things to occur. Both involve you.

1. Continue to contact the Governor and ask her to put SB 66 on the call for the special session. Let her know that supporters of the bill have already garnered the votes needed on the House floor and are hard at work to increase the number of Reps ready to vote for 36%. To contact the Governor:
   
   Call (505) 476-2200
   And here’s a link for leaving a comment: https://www.governor.state.nm.us/contact-the-governor/
   
2. Contact your House Rep. even if you are certain they would support the 36% rate cap. As we have learned, otherwise good legislators can make mistakes. Let them know that not only are you hoping for their support for the bill but that you hope they also reach out to other Representatives with whom they have a relationship and ask them to support the 36% rate cap. Click here to identify your House Rep.
   
3. Join our Legislative Huddle Friday afternoon where we will have more information on strategy to get this done. (See link to register near the beginning of this post.)

Let’s do this!

In solidarity and hope,

Paul & Roxanne

Categories: Local-State Government & Legislation

Tags: Featured, NM State Legislature, predatory lending, read more