During the first week of the 2022 legislative session, lawmakers introduced several bills that would lower New Mexico’s unreasonable 175% interest rate cap on small loans to 36%. But the Legislature won’t even be able to discuss such measures during the current 30-day session without an official “message” from Governor Michelle Lujan Grisham.
So far, the governor has not indicated she is willing to send such a message. In 2021, the legislature nearly passed a bill that would have dramatically reduced excessive interest rates on small installment loans in the state. Last year’s Senate Bill 66 would have capped rates at 36%, as many other states do. The bill passed the Senate with a good margin. However, the bill derailed in the House of Representatives, which passed a watered-down version backed by a coalition of Republicans and Democrats – including a large number of progressives.
The bill died at the end of the session before a conference committee convened to attempt to resolve differences. New Mexico Ethics Watch recently released a report titled “The Big Interest in Small Loans.”
We analyzed the effect of storefront loan companies on their customers, how this state compares to others, the history of usury laws in New Mexico, industry campaign contributions, messages lobbyists for these companies and other aspects of installment lending.
So far, at least three bills similar to last year’s SB 66 have been introduced in the Legislative Assembly: Senate Bill 107 (Sens. Bill Soules and Katy Duhigg, both Democrats) ; Senate Bill 129 (by Senator Gregg Schmedes, a Republican); and house
Bill 78 (by Rep. Patricia Caballero, a Democrat). The three measures would reduce the interest rate to 36%.
Although the governor has expressed the idea of ending high interest rates, a recent statement from his press office to reporters is not encouraging.
Its spokesperson wrote: “We are not prepared to compromise the importance of the issue by adding it to the agenda without a good faith consensus among stakeholders that will result in substantial action and protections for New Mexicans”.
However, seeking “consensus” here essentially means giving storefront lenders a veto over legislation that would essentially amount to a pay cut for their industry and still leave poor New Mexicans vulnerable.
“The longer we wait for good, common sense legislation to rid New Mexico of excessive interest rates, the longer the poor will have to suffer,” said Kathleen Sabo, executive director of New Mexico Ethics Watch. “We are calling on Governor Lujan Grisham to send a message and let the debate in the Legislative Assembly begin.”