A Golden Opportunity to Do the Right Thing: End Predatory Lending in NM

In the 2021 Legislative Session, Democratic leadership failed to reduce small loan lending rates from an eye-popping 175% to a still too high but more bearable 36%. 2022 offers Dems a chance for redemption and, on the heels of the 2021 redistricting process and with an election looming, redemption is needed. Call to action at the end of the post.

Before we dive into our discussion of small loan rate legislation, two brief announcements.

Legislative Zoom Huddle, Weds, December 29, 6-7pm. Learn about the bills we will be supporting and those we may oppose. Also find out about how you can plug into the Retake legislative advocacy strategy, including organizing Constituent-Legislator Conversations in January. This is a crucial huddle as we prepare for the 2022 Session. Click here to register.

Walking 4 the Climate – On January 17, 2022, MLK Day, the community will be walking from Four Directions to the Roundhouse, encouraging New Mexico to take brave action to combat the climate crisis. Walkers will commence at 11:30 am from four locations nearby and meet at Noon at the Roundhouse for a rally that will conclude before 1pm. Visit this link website page to learn more information and to sign up, or you can go to the Eventbrite registration page.

After a Dispiriting Redistricting Process, It’s Time for Dem Leadership to Inspire Voters and Achieve Big Wins in 2022 Session

Speaker Egolf sent out an email Sunday pronouncing the Special Session a great success. That is his job as Speaker, to put the best foot forward, even if many might cringe at his reframing. On Monday, I interviewed Mario Jimenez, Campaign Director for Common Cause NM, and he sort of sided with the Speaker, noting that the last redistricting process was an unmitigated disaster with a GOP Governor and a Dem. Roundhouse. The lawsuits flew when the session ended and the maps were drawn by a judge. This year’s process went off the rails for a bit when Senate Judiciary snubbed the indigenous community by eviscerating the map that included boundaries reflecting a Tribal Consensus. But in the end, the Dems returned to the original SB 2 map, restoring boundaries that had achieved Tribal Consensus. This is no small achievement and one that needs to be acknowledged. Native Americans have had centuries of broken treaties and broken promises, so retaining the Tribal Consensus was significant.

Nonetheless, no matter how you paint it, the session was a major disappointment for many grassroots Dems, the folks who make calls, canvass, and contribute to Dem. candidates. After the less-than-inspiring redistricting process, two things are abundantly evident:

  1. It is almost impossible for NM legislators (or any legislators), with so many vested interests, conflicts of interest, and partisan priorities to be expected to be the ones to draw up or even select maps in a way that is transparent or just. Inevitably, partisan and cross-party deals will be made behind closed doors, and those deals will always involve a toxic blend of self-interest, partisan advantage, and incumbency protection. It is simply impossible to expect anything more principled, and so we should cease setting the Roundhouse up for failure. Initially I thought the 30-day session might be the perfect moment to pass a joint resolution to create a truly independent redistricting commission to conduct a public process and design and select the maps. My enthusiasm for this idea took a couple of hits when one legislator stated unequivocally that there was less than zero interest in having another redistricting discussion that would consume valuable time in a short session. This sentiment was reiterated in my conversation with Mario Jimenez who underscored that while it is important that an independent commission be created, we have ten years to get that done and right now the trust level is not high in the Roundhouse and the potential for GOP grandstanding is high. So while the 2022 short session may not be the perfect moment, it is imperative that we get this done before another redistricting process occurs (2031).But, there is another opportunity for Dems to build voter enthusiasm: address the failed effort to reduce small loan rates and create a 36% interest rate cap on small loan rates, which brings us to #2.
  2. Democrats desperately need some principled wins at the Roundhouse in 2022, wins that can remind voters why we voted for them in the first place. We got that in 2021 with the decriminalization of abortion, the advancement of health security, the legalization of recreational marijuana, the passage of Community Solar, and the creation of the CRC. But the failure to stand up to the predatory lending industry in 2021 was a black eye for the party. One way to help voters move past the redistricting process would be to finally eliminate 175% interest rates in NM, not by reducing them to 99% but to 36% or even less. And Retake Our Democracy is not alone in seeing the Dem’s efforts to do so in 2021 as somewhere between weak-kneed and craven.

The Dems’ performance on lending legislation in 2021 was perfectly captured by Milan Simonich in his Dec 13, New Mexican column, “Leadership lacking in ending New Mexico’s 175 percent interest rate.” The title says it all.

If either the Governor or the Speaker of the House had made it clear that this was a priority, it would have happened. The Senate got it done, and with a nearly 45-24 Democratic advantage in the House, the Speaker should have been able to achieve a majority vote and more discipline in committees. From Simonich:

Everyone in power knows New Mexico is one of the more impoverished places in America. But its weak-kneed state House of Representatives has allowed a powerful industry to enslave people in debt by charging exorbitant interest rates.

The state Senate earlier this year approved a bill to cap annual interest rates on consumer loans at 36 percent. A handful of Democrats and Republicans in the House Judiciary Committee then mangled the bill by resetting the proposed interest rate at 99 percent.

Rep. Eliseo Alcon, D-Milan, sponsored the amendment for 99 percent rates, but no one was fooled. It was written by the lending industry. In another concession to storefront lenders, Alcon’s amendment kept the 175 percent rate in place for an extra 15 months.

Santa Fe New Mexican, “Leadership lacking in ending New Mexico’s 175 percent interest rate” by Milan Simonich

Simonich nailed this — Alcon’s introduction of his amendment made it clear he had no idea what was in the amendment. He opened his introduction with: “I don’t really know much about money…you should see my check book.” And his ad lib description of the amendment made it appear it had been written by someone else. But it passed HJC nonetheless, with two generally solid Dems (Reps. Georgene Louis and Micaela Lara Cadena) describing how they knew constituents who were desperate and the 175% loans were their only option. With all due respect to Reps. Louis and Cadena, throwing a drowning man or woman a concrete life jacket is not a rescue but a death sentence.

The House Floor session discussing and voting on Alcon’s amendment seemed staged, occurred with dizzying speed, and involved a complex series of amendments. Right after Alcon’s amended bill was introduced, a floor amendment was introduced by Rep. Herrera, which was then instantly supported by Reps. Patty Lundstrom, Georgene Louis, Day Hochman, and Doreen Gallegos. The Herrera amendment eliminated Alcon’s bill language that would have maintained the 175% rate for 18 months. It also created a two-tier rate limit structure with a 36% loan rate limit on loans over $1,000 and a 99% rate on loans under $1,000. While this was nowhere near as good a bill as the Senate version, the lending industry wasn’t content. Suddenly, Rep. Daymon Ely introduced an amendment to change the ceiling on 99% loans from $1,000 to $1,100, a seemingly random and relatively benign change which passed quickly. Of course it was not benign at all, as loans under $1100 comprise 62% of all small loans . And so the bill, as amended by Ely, would reduce loans to 36% for only about 38% of borrowers, and the remaining 62% of borrowers would be subject to the 99% loan rate. What ensued behind the scenes was a tug of war for votes. Advocates thought that after passing a solid bill through the Senate calling for a 36% rate cap on all small loans, a 36% loan rate cap was within reach. They were not amused to see that bill destroyed in the House and pressed the Speaker to corral his troops. The Speaker pushed back, claiming he didn’t have the votes.

Whatever the case, with a 45-24 Democratic majority in the House, you have to think that if the Gov. and Speaker wanted the 36% rate cap to happen, it would have passed in 2021 and we wouldn’t be having this discussion.

Simonich goes on to tell what transpired after the House passed the Herrera amended bill that replaced Alcon’s amended bill. With the House and Senate having passed two vastly different bills with but one day left in the session, negotiations had to be swift.

Because the Senate and House bills clashed, a committee of legislators from each chamber was to meet to attempt a compromise. At least that’s supposed to be how the system works.

House Speaker Brian Egolf, D-Santa Fe, appointed Rep. Patty Lundstrom, D-Gallup, as one of three House members enlisted to work with senators on finding common ground.

At this point, legislators’ accounts degenerate into he-said/she-said claims. Sen. Bill Soules, D-Las Cruces, claimed Lundstrom warned she would not yield on anything. Egolf says Soules’ claim is false, that his members were ready to work with senators.

He said/she said aside, it didn’t get done, and 2022 offers the Dems an opportunity to get it right, which will require the Governor to put a small loan rate bill on her call. Given this is an election year, the Governor and Speaker might want to look below at the unedited comments that were made in The New Mexican in response to Simonich’s column.

New Mexican Readers’ Comments

Donna Burns-Clark, Dec 15, 2021, 9:54pm

Government sanctioned loan sharking at it’s finest! A 36% annual interest is outrageous. 175% is obscene! Shame on us…

Scott Smart, Dec 15, 2021 2:33pm

And I thought politicians are supposed to represent the people…

Jarratt Applewhite, Dec 13, 2021, 7:06pm

At one point I thought payday loans were a scourge and should be abolished. Then I read Lisa Servon’s The Unbanking of America (https://www.amazon.com/Unbanking-America-Lisa-Servon/dp/1328745708/ref=sr_1_1?crid=1UMUQ6UOXGGTG&keywords=lisa+servon&qid=1639446876&sprefix=servon+lisa%2Caps%2C257&sr=8-1). I now understand that there are millions of people who don’t have access to the financial services that most people take for granted. Sadly this industry fills a gap. That doesn’t mean it shouldn’t be reined it. The original legislation would have done that. What’s depressing is that this is a little-league industry. That it’s lobbyists could get their claws so deep into our legislators makes me wonder how easy it would be for larger interests to buy off our “servants”. Avangrid, for example, could wend its way into these wallets with greater dispatch. Ditto for profit healthcare, ditto energy producers, ditto bankers ditto . . . .

Richard Irell Dec 13, 2021 6:09pm

Once again, great reporting by the SFNM.

Good to see Democrats being bashed when they betray the people they are supposed to be helping.

Support your local newspaper!

Floyd Cable Dec 13, 2021 11:21am

“Payday Loans” and “Title Loans” should be renamed. Change “Loans” to “Rip-offs.” The financial rip-offs are about one thing – exploiting the poor and those who because of bad luck, exploitative employers, or unfortunate choices are in financial duress. The loan providers who claim they provide cash/credit to people in need don’t care that they ruin lives – those loan agents are swindlers, pure and simple, and should not be allowed to continue to operate. It is unconscionable that these swindlers and usurers are allowed to ruin the lives of thousands of people. Even a 35% interest rate would be out of order, but 175% is absolutely ridiculous and indefensible. Any politician who fails to support reforms of this exploitation of the poor deserves to be voted out of office. Such politicians should keep in mind that the great majority of their constituents feel that just because someone is in financial duress that doesn’t mean that vulture lenders should be left to exploit that misfortune and ravage the lives and futures of people and their families.

Lucas Lujan Dec 13, 2021 3:22pm

I once borrowed from this type of business, he was an Elder in the Kingdom Hall that I use to attend. This and other miss deeds led me to leave. Thank goodness!

Dottie Butler Dec 13, 2021 9:28am

Republicans will exploit this issue to try to get more votes, but they care even less than the Democrats about the people that ultimately get exploited by storefront lenders if that’s even possible.

There is no bigger embarrassment to New Mexico than this.

It ought to be a slam-dunk bipartisan issue, just think, lowering the cap on interest rates from what is it, 149% to 36%, does anyone really have any questions about this?

I guarantee that anyone that can get a 149% interest rate loan now will be able to get a 36% interest rate loan if the cap is lowered.

Those finance companies will still be making a lot of money off of the people that can afford to pay it the least.

Charlotte Rowe Dec 13, 2021 9:21am

This amounts to graft and mob-type loan sharking. Shame on any lawmaker who supports the payday loan and title loan “industry” (more like mob). Those slimy crooks should be run out of the state on a rail. No excuse for their existence. They do not provide any service that anyone needs, they only prey on the vulnerable. They do not help the state economy. Their demise would be no loss to anyone.

Khal Spencer Dec 13, 2021 9:12am

Payday loans, title loans, 175% loans. All signs of how hopelessly mired in debt, poverty, and lackluster leadership we are in New Mexico.

Here’s an idea for so-called Progressives. Backstop the credit unions to some degree on the risk of making 36% loans (or 17.5% loans) and pass a bill outlawing legalized usurious rates in New Mexico.

Exodus 22:25

loan sharking at it’s worse. ONCE AGAIN; TIME FOR TERM LIMITS and to elect real representatives of the PEOPLE, both sides of the Isle.

Henry R. Dec 13, 2021 7:48am

Any New Mexico State lawmaker that believes a 175% interest rate is fair and votes in favor of it, has absolutely no business being a lawmaker. A 175% interest rate in no way, shape or form makes any sense whatsoever; anyone lawmaker that thinks it does, definitely doesn’t have the best interest of the citizens of NM in mind.

Richard Reinders Dec 13, 2021 3:59pm

Another reason we are 50th, time to find legislators that have the constituents as a priority. I guess legalizing pot has a higher priority. 

Mike Johnson Dec 13, 2021 7:58am

 Well said, 17.5% should be the max allowed, period.

Khal Spencer Dec 13, 2021 9:13am

Any sane, rational person, any politician not bought-and-paid for by the “lending” industry, would look at these numbers and be certain the decimal point was misplaced, i.e. 17.5% vs. 175%. These are interest rates “the mob” would envy. Legal loan-sharking, pure and simple.

David Ford Dec 13, 2021 6:55am

Agreed even 36% is outrageous – usury by any other name…

Stephen Fischmann Dec 12, 2021 10:40pm

Thank you Milan and Senator Soules for continuing to shine a light on the outrageous predatory lending situation in New Mexico. Many borrowers are devastated financially and emotionally by these lenders. 36% is still an awfully high cap. There is no excuse for the governor and legislators. Enact the 36% cap now.

There you have it, the unvarnished views of common sense New Mexicans. Can Democratic leadership just find the courage to put the interests of vulnerable New Mexicans above the interests of lobbyists for the predatory lenders? No courage is needed, just common sense and common decency.

Click here to tell the Governor you want a 36% small loan rate on her call in 2022 and to use her political influence to press legislators to get this done.

In solidarity and hope,

Paul & Roxanne

P.S. It is the holidays and our daughter is in town, so we will be lying low between now and 2022. So have a great Christmas, Hanukkah, Kwanzaa or whatever you celebrate and we’ll be back at you in 2022.

Categories: Economic justice, Uncategorized

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2 replies

  1. Great newsletter today, Paul. Thanks for the summary of the process for redistricting and its questionable results. And I am 100% in agreement with you about predatory lending. I came here from living in states with usury laws that capped interest rates at 10% or slightly over. Payday loans and similar bloodsucking operations prey on our most vulnerable residents, those living day by day who are sometimes forced to take these loans just to survive. It is nothing less than shameful that our legislature didn’t long ago set reasonable interest rate limits to prevent this.

  2. By now we know it all, or almost all we need to know.
    However, in the equation formulated by our knowledge and vision we should begin to include Global Warming.

    Which begs the question. Are we effective activists when ALMOST ALL our politicians have been corrupted by BIG MONEY?



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