Gov., Legislature should respond to high-interest loans

In the first week of the 2022 legislative session, lawmakers introduced several bills that would lower New Mexico’s unscrupulous interest rate cap from 175% on small loans to 36%. But the Legislature won’t even be able to discuss such measures in the current 30-day session without an official “message” from Gov. Michelle Lujan Grisham.

However, at least so far, the governor has not signaled that she is ready to send such a message. In 2021, lawmakers were close to passing legislation that would have usefully curbed excessive interest rates on small consumer loans in the state. Last year’s Senate Bill ’66 would have capped tax rates at 36%, like many other states do. The bill passed the Senate by a healthy margin, but was 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 met to try to resolve differences.

New Mexico Ethics Watch recently published a report entitled The Big Interest in Small Loans. We analyzed the impact retail lending companies have on their customers, how this state compares to others, the history of usury laws in New Mexico, industry campaign contributions, messages from lobbyists for these companies, and other aspects of the consumer lending business.

So far, at least three bills similar to last year’s SB 66 have entered the legislature: SB 107 by Democrats Bill Soules and Katy Duhigg, SB 129 by Republican Gregg Schmedes, and HB 78 by Democrat Patricia Caballero. All three would bring the current interest rate down to 36%. Though the governor has paid lip service to the idea of ​​ending high interest rates, a recent statement from her press office to reporters is not encouraging. Her spokeswoman wrote, “We are not prepared to jeopardize the importance of the matter by bringing it to the agenda without a bona fide consensus among stakeholders, which will result in substantive action and protections for New Mexicans.”

Striving for “consensus” here, however, essentially means giving in-store lenders the power to veto laws that would effectively cut wages for their industry and still leave poor New Mexicans vulnerable. Kathleen Sabo, executive director of New Mexico Ethics Watch, says, “The longer we wait for good, sensible legislation to rid New Mexico of excessive interest rates, the longer poor people will suffer. We call on Governor Lujan Grisham to send a message and start the debate in the Legislature.”

As our report shows, the microcredit industry is helping to keep low-income people in a cruel debt cycle. We note how the industry is targeting Native Americans: The city of Gallup has about 40 retail stores despite having a population of just 22,000.

Our report shows how these high-yield loans are sucking money out of the state, since almost all of the major retail lending companies are headquartered outside of New Mexico. And it examines how the industry’s argument that these high-yield loans are necessary to help poor people is self-serving, even if it has been swallowed up by many lawmakers and lobbyists.

New Mexico Ethics Watch urges Gov. Lujan Grisham to give her full support for legislation to lower interest rates on small loans. And we urge lawmakers to reconsider their reluctance to support this important move toward fair lending. Our The Big Interest in Small Loans report is available at

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