Storefront loans bill tabled by Senate committee

By Milan Simonich
Santa Fe New Mexican
State Sen. Bill Soules says attempts to regulate New Mexico’s storefront lending industry appear dead for at least another year.

Soules, D-Las Cruces, is sponsoring one of the three reform bills to cap interest rates on loans at 36 percent. Currently, storefront lenders often charge rates of 400 percent or more.

Impoverished people in need of a fast infusion of cash sign contracts with lending companies for these high-interest loans, Soules said. Many can’t meet the repayment schedule, so they end up eventually paying thousands of dollars on an original loan of a few hundred dollars.

His bill was tabled in the Senate Corporations and Transportation Committee on a bipartisan vote. Soules said Sen. Phil Griego, chairman of the committee, has told him he will not hear anymore bills this session on capping interest rates.

“This isn’t the end, though. I intend to come back next year with a bill to stop a system that takes advantage of people,” Soules said.

Griego, D-San Jose, said in a separate interview that he is still willing to revive Soules’ bill if lenders and advocates for loan caps can agree on a consensus bill.

One group that wants a cap on interest rates still believes there could be a breakthrough this session.

Negotiations between the storefront lending industry and a group called the New Mexico Fair Lending Coalition are underway, said Steve Fischmann, co-chairman of the citizen group.

“There are some talks going on. Right now we’re hopeful,” Fischmann said in a phone interview.

He said it could take a few more days to determine if the negotiations lead anywhere. About three weeks are left in the 60-day legislative session.

Two bills for loan caps similar to the one by Soules were introduced in the House of Representatives. Both were blocked by majority Republicans on the Regulatory and Public Affairs Committee.

Meantime, two mirror bills that Fischmann says would allow 800 percent annual interest rates are still alive. Those bills, one in the House and one in the Senate, are for the Refund Anticipation Loan Act. In addition to setting rates, the bills would require licensing of those who make loans secured by income tax refunds or tax credits.