In the first week of the 2022 legislative session, lawmakers introduced several bills that would lower New Mexico’s unconscionable 175 percent interest rate cap on small loans to 36 percent. 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.
So far, the governor has not indicated she’s willing to send such a message. In 2021, the Legislature came close to passing a bill that would have meaningfully curbed excessive interest rates on small installment loans in the state. Last year’s Senate Bill 66 would have capped rates at 36 percent, as many other states do. The bill passed the Senate by a healthy margin. However, the bill got derailed in the House of Representatives, which passed a watered-down version supported 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 and resolve differences. New Mexico Ethics Watch recently published a report titled “The Big Interest in Small Loans.”
We analyzed the effect of storefront loan companies on their customers, how this state compares with others, the history of usury laws in New Mexico, campaign contributions from the industry, messaging from lobbyists for these companies and other aspects of the small installment loan business.
So far, at least three bills similar to last year’s SB 66 have been introduced in the Legislature: Senate Bill 107 (from Sens. Bill Soules and Katy Duhigg, both Democrats); Senate Bill 129 (by Sen. Gregg Schmedes, a Republican); and House Bill 78 (by Rep. Patricia Caballero, a Democrat). All three measures would reduce the interest rate to 36 percent.
Although the governor has given 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 willing to compromise the importance of the matter by adding it to the agenda without a good-faith consensus between stakeholders that will result in substantive action and protections for New Mexicans.”
However, seeking “consensus” here essentially means giving storefront lenders veto power over legislation that basically would amount to a pay cut for their industry and still leaves poor New Mexicans vulnerable.
“The longer we wait on good, commonsense legislation to rid New Mexico of excessive interest rates, the longer poor people will have to suffer,” said Kathleen Sabo, executive director of New Mexico Ethics Watch. “We call on Gov. Lujan Grisham to send a message and let the debate in the Legislature begin.”