It’s showdown time in the New Mexico House of Representatives. Wealthy corporations outside the state are in a corner. Land-poor New Mexicans occupy the other.
It is not a question of which side had the political advantage. Many House members have been more concerned with appeasing a predatory industry than helping their most needy constituents.
Storefront lenders in New Mexico are legally allowed to charge an annual interest rate of up to 175%. It’s a staggering number that can trap low-income people in debt for years.
Last year, the Democratic-dominated state Senate approved a bill to lower the maximum annual interest rate to 36%. It’s still high but not as despicable as the current system.
Republicans and a few self-proclaimed progressive Democrats in the House of Representatives worked together to destroy the Senate bill. Discord kept the 175% interest rate going – exactly what the storefront lenders wanted.
Three Democrats on the House Judiciary Committee led the way by torpedoing last year’s bill for 36% rates.
A similar reform measure, House Bill 132, is due before the Judiciary Committee on Wednesday afternoon.
It would cap the annual interest rate at 36%.
Three Democrats who helped the industry last year remain on the committee. They are representatives Micaela Cadena from Mesilla, Eliseo Alcon from Milan and Georgene Louis from Albuquerque.
Lawyers and lender lobbyists rewrote the Senate bill with a 99% interest rate. They handed the bill over to Alcon, a dedicated infantryman.
Alcon needed the help of his fellow Democrats to get his amendment through the committee. He got it from Cadena and Louis.
All said a 36% rate could dry up credit for people who weren’t eligible for bank loans or credit unions. They ignored testimony from credit union executives who said their institutions could provide most installment loans for less than 36%.
Louis ran for Congress shortly after taking a stand for 99% interest rates. She pretended to be a woman of the people. People knew better. Louis is defeated.
Louis and Cadena joined three other Democrats in further reworking the Senate bill when it went to all 70 members of the House. Louis and Cadena opted for 99% interest rates on loans of $1,000 or less. Larger installment loans would be 36%.
Rep. Daymon Ely, D-Corrales, did the industry a little better. He pushed a successful amendment to have the 99% rate apply to loans of $1,100 or less, a change that made life harder for the little guy.
Ely has just signed as a sponsor of HB 132 for a rate of 36%. He said it was not a flip-flop. His goal, he said, has always been to achieve something better for consumers than the 175% rate.
Rep. Patti Lundstrom, D-Gallup, was one of the architects of the idea for a mix of 99% and 36% rates. Lundstrom received $6,000 from the showcase loan industry during the 2020 election cycle, the most of any House member.
House Speaker Brian Egolf’s PAC, D-Santa Fe, took three times as much from storefront lenders. Egolf appointed Lundstrom to the conference committee that was supposed to work on a compromise with the Senate.
Lundstrom is now sponsoring a bill with Cadena and Rep. Dayan Hochman-Vigil, D-Albuquerque, to revive 99% interest on loans of $1,100 or less. The 36% rate would only apply to larger loans. Their proposal is House Bill 172.
The bill is a clear signal that Cadena will try again on Wednesday before the Judiciary Committee to modify the reform measure aimed at a universal interest rate of 36%. Even rates of 175% or 99% displease some lenders.
“The Alliance of Online Lenders opposes rate cap bills because they restrict consumers’ access to credit,” the organization’s spokesperson, Brian Muhlbach, wrote to me in a statement. E-mail.
How touching. Businesses that want unlimited interest rates look to consumers.
A maverick legislator opposes the corporatist line. Rep. Phelps Anderson of Roswell, the only independent in the House, is a sponsor of the bill for a 36% cap.
If only Democratic Governor Michelle Lujan Grisham was as brave as Anderson, a former Republican.
Lujan Grisham loves to show off in press releases. She sent one on Tuesday that said, “Governor Introduces Legislation to Support Rural Health Care Delivery.”
Maybe she skipped civics in middle school. The governor can’t introduce legislation, but she’s happy to pretend otherwise in this election year.
But Lujan Grisham could have been a big help to the poor by agreeing to let lawmakers put a 36% interest rate bill on their agenda for the 30-day session. She did not do it.
Egolf and other HB 132 sponsors added credit to the measure for saying it was relevant during a legislative session devoted primarily to the state budget. They withdrew the supply request before a committee had heard the bill.
Democrats control the legislature and the governor’s office. But many of them say it’s nearly impossible to muster enough votes to eliminate a 175% interest rate.
Their indifference reminds me of something an old sheriff said in the classic western. Midday : “People need to talk to each other about law and order before they do anything about it. Maybe because deep down, they don’t care.
Ringside Seat is an opinion column about people, politics and current affairs. Contact Milan Simonich at [email protected] or 505-986-3080.