Predatory Lending in NM – Bad for our State!

Predatory Lending in NM – Bad for our State!

Predatory Lending in NM – Bad for our State!

Posted on Feb 4, 2016 in FeaturedNewsTake Action

New Mexico cannot afford predatory loans. It is absolutely necessary for the Legislature to put a cap on the interest rates of these lenders.

 

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PLEASE  take a look at the VIDEO produced by filmmaker Daniel Sonis in conjunction with the New Mexico Fair Lending Coalition, a consortium of over forty financial counselling and social service organizations, who see the devastation created by high cost lending stores and internet sites daily.  Their mission is to end the looting of low-income New Mexicans by unscrupulous lenders, while encouraging the growth of beneficial loan business models to replace them.

The consortium has two specific goals.

  • Enact across-the-board interest and fee caps of 36% or less on all New Mexico regulated loans.  Experience in other states and the US Military has shown this to be the simplest and most effective way to eliminate loan abuses.
  • Encourage government policies that promote the growth of affordable lenders as well as treasury and permanent fund investment in those that succeed.

(-Ona Porter and Steve Fischmann are co-chairs of the New Mexico Fair Lending Coalition)

 

Industry buys lawmakers’ complicity 

The industry buys government complicity in loan ripoffs at many levels.

Over 20 of the most powerful lobbyists in the state have been retained by storefront lenders. Sources tell us some of those lobbyists have threatened to cut off client campaign contributions to lawmakers who vote against the industry, even from clients that are not lenders.

One of the industry lobbyists is the brother of Senate Majority Leader Michael Sanchez. Sen. Sanchez sponsored a 36 percent interest cap bill in 2014 and then mysteriously failed to convince a normally compliant Rules Committee chairperson to hear it.

Gov. Susana Martinez and Republican legislative leadership have accepted substantial industry contributions, both directly and through their political action committees. No surprise then that a number of Republican representatives who supported interest-rate caps going into last year’s legislative session abruptly chose to vote in a solid party block against them.

If they wanted to, state regulators and the Legislature could reduce consumer suffering in a relative heartbeat. Lawmakers could follow the lead of 29 states that have banned auto title loans and 12 states that have enacted across the board interest rate caps of 36 percent or less.

The governor has the power to deny license renewals to irresponsible lenders. She could also take administrative actions to stimulate adoption of lending models costing less than a tenth as much as the average storefront loan.

 

Why are these issues important?

An important factor is that we estimate that at least 80 percent of the fees and interest associated with those short-term loans are leaving our state — it’s one of the reasons we had 13 cities and counties in the state send resolutions to state legislators. It’s a huge economic drain — about $180 million annually.

 

It’s time to end the suffering of up to a quarter million New Mexicans ripped off by high cost small loans annually. Legislators, stop dithering and give us genuine reform.