The end of the holiday season is a great time to do a house cleaning. My use of the uppercase H is by design.
Because of its dedication to lobbying instead of ordinary people, the New Mexico House of Representatives allows lenders to charge the unreasonable annual interest rate of 175 percent.
Two members of the House of Representatives are married to lobbyists who are paid lawyers for credit companies.
One is Rep Antonio “Moe” Maestas, D-Albuquerque. His wife is senior lobbyist Vanessa Alarid. She campaigned for the banking industry this year when she managed to keep the interest rate at 175 percent.
The other legislator is Doreen Gallegos D-Las Cruces. She is married to Scott Scanland, another well-known lobbyist. He hasn’t campaigned for the banks this year, but was previously one of their paid advocates.
Legislators should divorce any law that a spouse is lobbying for. New Mexico is a jointly owned state. The income from lobbying work also goes into the legislature’s pocket.
Maestas tried to counter my argument by saying that he could never abstain from doing his job. He said his position was based on advice from someone in the National Conference of State Legislatures. Should Maestas withdraw from a vote, special interests could repeatedly silence his voice by hiring his wife as a lobbyist.
Below is above, and conflicts of interest must at least be allowed in the Maestas world.
It is time for the 70-strong House of Representatives to take a stand. The chamber is already looking mean for its handling of interest rates. The least that House Speaker Brian Egolf, D-Santa Fe, can do is ask members to abstain on bills lobbied by their spouse.
Eliminating conflicts of interest is especially important with bills that lower the triple-digit interest rates charged by credit institutions to low-income people.
Earlier this year, state senators voted 25-14 to lower the rate from 175 percent to 36 percent. A mix of Democrats and Republicans in the House of Representatives sank the bill with a flurry of amendments and raised the proposed interest rate on many small loans to 99 percent.
Maestas and Gallegos voted for an interest rate of 36 percent when the bill was negotiated in the House of Representatives Committee on Trade and Economic Development.
Gallegos later became part of a small group of members of the House of Representatives who worked out a mix of 99 percent and 36 percent interest rates. Maestas gave a speech in the House of Representatives in which he advocated the “compromise” which would have included 99 percent rates.
With the separation of the Senate and the House of Representatives, the reform law died. The 175 percent rate remains legal. It was a lobbying triumph and an embarrassment for the house.
State credit unions had strengthened. Their leader promised to provide installment loans at interest rates of 36 percent or less.
Most of the House of Representatives still opted for storefront lenders. This included Rep. Susan Herrera, D-Embudo, who was a sponsor of the law to cut the interest rate to 36 percent.
“Nearly 600,000 of these small installment loans were taken out in New Mexico last year,” Herrera said. “These numbers tell us that families in our state need the ability to access these emergency resources just to make ends meet. If we set the cap too low, they’ll be denied all credit and run out of options, so this compromise strikes that balance. “
Industry lobbyists couldn’t have said it better. 36 percent are kind of tiny.
Paul B. Stull, President and CEO of the Credit Union Association of New Mexico, saw the House of Representatives deal as a failure.
“We help people get out of debt instead of going into debt that can ruin their lives. We charge interest rates that are only a fraction of 175 percent, ”he said.
Another bill to lower the interest rate to 36 percent could be tabled in the 30-day legislative period beginning next month. Democratic Governor Michelle Lujan Grisham could open a place on the agenda for the bill.
Another possibility is for the legislature to propose a constitutional amendment that lowers the interest rate. This maneuver would bypass the governor by putting the proposal to a nationwide popular vote.
A proposed constitutional amendment would have to vacate both houses of the legislature in order to make the vote. The Senate is solid. Here, too, the House could be an obstacle to reform.
Think New Mexico, a public order organization, is pushing for a rate no more than 36 percent. In three weeks before the legislative period, Think New Mexico is already counting the votes in the House of Representatives.
33 members support an interest rate of 36 percent. Twenty-nine are against the rate cut, eight are undecided or don’t say where they stand.
Fred Nathan, who heads Think New Mexico, places maestas and gallegos among his organization’s eight votes as tossup votes.
My inbox is overflowing with emails and letters of political inaction on the subject.
“The 175 percent interest rate is a cheek and immoral,” wrote one subscriber.
Another declared: “Usury used to be illegal.”
In New Mexico’s home, lobbyists seem to have more muscle mass than loan sharks.
Ringside Seat is an opinion column about people, politics and news. Contact Milan Simonich at msimonich@sfnewmexican.com or 505-986-3080.
