Lack of guidance in ending the 175 percent interest rate in New Mexico | Legislator | Legislative session in New Mexico

A strange sideline is going on in New Mexico. It focuses on the obscene 175 percent annual interest loans that businesses can bill downtrodden consumers.

Everyone in power knows that New Mexico is one of the poorer places in America. But its weak House of Representatives has enabled a powerful industry to enslave people in debt through exorbitant interest rates.

The state Senate passed a bill earlier this year to limit annual consumer credit interest rates to 36 percent. A handful of Democrats and Republicans on the House of Representatives Judiciary Committee then maimed the bill by setting the proposed interest rate back to 99 percent.

MP Eliseo Alcon, D-Milan, supported the change for 99 percent rates, but no one was fooled. It was written by the credit industry. In another concession to retail lenders, Alcon’s amendment kept the 175 percent rate for an additional 15 months.

The bill was further amended on the House Floor to allow a mix of 99 percent and 36 percent interest rates depending on the size of the loan. Alcon voted against the revised proposal.

As the Senate and House bills collided, a committee of lawmakers from each chamber should meet to seek a compromise. At least that’s how the system should work.

House Speaker Brian Egolf, D-Santa Fe, named Rep. Patty Lundstrom, D-Gallup, as one of three House Representatives who worked with Senators to find common ground.

At this point the lawmakers’ bills degenerate into he-said / she-said. Senator Bill Soules, D-Las Cruces, claimed Lundstrom had warned she would not give in. Egolf says Soules’ claim that its members are willing to work with senators is false.

In any case, the conference committee did not meet. Store front lenders celebrated when 175 percent interest remained on the books.

It was an epic failure for the Democrats. They control House 45-24-1, but Egolf couldn’t get the 36 votes necessary to approve the lower rate.

That brings us to the present. Few topics have been more studied or discussed longer than the 175 percent interest rate. But Democratic Governor Michelle Lujan Grisham wants more thought.

She asked Lt. Gov. Howie Morales to meet with various lawmakers and people in the lending industry to see if some sort of agreement can be reached on interest rates before the regular 30-day legislature begins in January.

“The governor absolutely agrees that this is an important issue and supports measures to protect the New Mexico,” said Nora Meyers Sackett, press officer for Lujan Grisham. “Our office has had discussions aimed at building consensus among stakeholders and lawmakers to drive legislative action.”

Nothing prevents Lujan Grisham from going ahead. She wanted recreational cannabis to be legalized and convened a special session to make sure this happens. Lujan Grisham can push for lower rates just as hard if she wants.

Advocating a 36 percent ceiling is not a bold position. Eighteen states and Washington, DC have adopted this phrase. It already applied to soldiers under the Bundeswehr Loan Act.

Some states do better. Arkansas limits consumer credit to 17 percent annual interest. The state that pioneered the West Memphis Three and tried to prevent the Little Rock Nine from incorporating a high school is more progressive than New Mexico when it comes to curbing predatory lending.

Morales told me his meetings with lawmakers are important if a compromise proposal is to be put on the agenda next month.

“This is one of those bills that can take a lot of energy and emotion,” he said.

It shouldn’t. Democrats claim they are determined to end the cycle of poverty in New Mexico. They dominate the Senate, the House of Representatives and the governorship. Only the lobbyists of the credit industry and campaign contributions to politics could wage this further tough battle.

Morales has met with these lawmakers so far:

u Representative Doreen Gallegos, D-Las Cruces, the House Majority Leader. She’s not open to interest rates, but her husband was. He is lobbyist Scott Scanland, who has campaigned for the credit industry for the past several years.

u Representative Micaela Cadena, D-Mesilla. Cadena gave a rambling speech in March that talked about 99 percent of the rates. She said she had a friend who needed an abortion but had no money. When the friend could not take out a loan, Cadena charged the procedure from her credit card herself. How this spoke for the worthiness of high-yield lenders is still unclear.

u Rep. Herrera and Sens. Soules and Katy Duhigg, D-Albuquerque. You prefer the 36 percent rate.

In fact, every Senate Democrat apart from Gallup’s George Muñoz supported the 36 percent ceiling. Even a Republican senator, Gregg Schmedes von Tijeras, voted for it.

Roswell MP Phelps Anderson, the only Independent in the House of Representatives, said he was also in favor of the 36 percent limit.

The New Mexico credit unions signed up this year to offer small loans at that rate. New Mexico credit unions outnumber lenders, 561 to 147. But the credit unions’ commitment should silence claims that the chronically poor need high-interest lenders to obtain emergency money.

Rep. Alcon didn’t see it that way.

“Why are the credit unions getting involved now?” he asked after speaking out in favor of 99 percent interest.

He should have wondered how he could face the people of his district. The same goes for Egolf. The speaker turned down the 99 percent rate during a hearing on the House Judiciary Committee, but never publicly confronted the industry about why that was their magic number.

Egolf told me that he worked hard behind the scenes to get support for the 36 percent rate, but he didn’t make it. Herrera vouched for Egolf’s efforts. Lender lobbyists were more effective than Egolf in convincing his Democratic faction.

States with little in common – liberal California and conservative Nebraska, mountainous Colorado, and flat Illinois – have upper limits of 36 percent.

Then there’s New Mexico, where the in-store lenders are stronger than the House of Representatives.

Ringside Seat is an opinion column about people, politics and news. Contact Milan Simonich at [email protected] or 505-986-3080.