New Mexico House Finally Sees the Light at 175% Interest Rates | Legislation | New Mexico Legislative Session


Seldom have smooth, wealthy lobbyists like Raymond Sanchez taken such a terrible beating.

For years, Sanchez turned members of the New Mexico House of Representatives into toadies for the retail lending industry, which charges an annual interest rate of 175 percent.

Any attempt to lower interest rates ended in defeat, usually because a mass of members of the House of Representatives lobbied for lenders at the expense of impoverished consumers.

That ugly history was resolved late Monday when the House of Representatives voted 51 to 18 on a reform measure that had suffered for nearly a decade.

House Bill 132 would lower the maximum annual interest rate on most personal loans from 175 percent to 36 percent. An amendment to the bill introduces an additional fee of 5 percent for loans of $500 or less.

The proposal next goes to the Senate, where a similar bill for a 36 percent cap passed easily last year, only to be blocked by a group of House members.

Sanchez, himself a former speaker of the state House of Representatives, will continue to try to stop HB 132. But his best chance of defeating the reformers has been lost.

Sanchez and a host of other lobbyists had always been able to control debate in the House of Representatives with a well-worn argument. They claimed a “low” cap of 36 percent would prevent companies from making risky loans to people who need cash for an emergency.

Roswell Representative Phelps Anderson, the only independent in the House of Representatives, challenged the industry’s claims and then co-sponsored the reform bill.

Anderson comes from the family that founded the Atlantic Richfield oil company and knows the corporate world. He said an interest rate of 36 percent is more than enough to make small loans viable.

Republican legislators typically had closed ranks to help lenders in the store, arguing that the free market should set lending rates. Your firewall collapsed on Monday.

Eight Republicans voted for the 36 percent ceiling. Newly appointed Los Lunas Rep. Brian Baca was one of them. Rio Rancho’s freshman Joshua Hernandez was another advocate for consumers.

Rep. Cathrynn Brown, a Carlsbad attorney and perhaps the most conservative member of the Legislature, also voted in favor of the bill. She rarely supports Democratic initiatives, but made an exception for a bill to evict predatory lenders.

They defied the leadership of their party. Rep. Rod Montoya, Farmington’s Republican whip, resorted to false claims. Montoya said credit unions could charge 55 percent interest rates, but in-store lenders should operate at a lower rate.

His testimony drew a quick rebuttal from Juan Fernández, President and CEO of the Credit Union Association of New Mexico. Credit unions charge no more than 28 percent on loans. They outperform lenders 3 to 1 in the store, but credit unions offer consumers a better deal.

Forty-two Democrats voted in favor of the reform bill, including Rep. Tara Lujan, D-Santa Fe. The problem was personal to her.

“I took out one of these high-interest loans in my early 20s,” Lujan told me. “I was fortunate to work full-time. I repaid the loan as soon as possible after realizing how much it cost me.”

Rep. Susan Herrera, D-Embudo, also implemented the reform action this year.

“It’s really a financial pandemic,” she said of triple-digit lending rates.

Herrera made a smart move by mentioning that the 36 percent rate was supported by groups ranging from the Navajo Nation to the New Mexico and Hispano Chambers of Commerce.

Two Democrats still voted against the rate cut measure. They were reps. Eliseo Alcon from Milan and Ambrose Castellano from Las Vegas.

Alcon carried the industry pitch last year. If there had to be an interest rate cut, it would be to 99 percent.

His rewrite of the bill sparked a conflict with the Senate. The confrontation got nowhere, but the 175 percent interest rates remained.

Other Democrats walked away from supporting a more recent call for a 99 percent interest rate on loans of $1,100 or less.

Reps. Dayan Hochman-Vigil of Albuquerque, Patty Lundstrom of Gallup and Micaela Cadena of Mesilla introduced a bill that would target 99 percent interest on small loans and 36 percent on larger ones.

They didn’t try to change Herrera’s bill by pursuing the higher rate. Instead, Cadena sponsored the Tamer change for a 5 percent fee on loans of $500 or less.

The night’s most obvious flip-flop came from retired Rep. Daymon Ely, D-Corrales. It was Ely who pushed through a floor last year that would have extended the interest rate from 99 percent.

Not this time. Ely took his microphone and approved Herrera’s bill for 36 percent interest. He called her proposal one of the more important actions he had seen.

That was just as important last year. What has changed is that 2022 is an election year.

A disgruntled voter base is fed up with the 175 percent interest rate. All of those voices eventually drowned out Sanchez and the rest of the lobbyists.

Ringside Seat is an opinion column about people, politics and news. Contact Milan Simonich at or 505-986-3080.


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