Lt. Gov. Diane Denish, the Democratic candidate for governor, on Tuesday called for outlawing most payday loans, which she described as predatory.

Denish has for years pushed for stricter laws against businesses that make the small, short-term, high-interest loans. But on Tuesday she said such loans should be criminalized.

"Denish proposes making the predatory practices of payday lending and car-title loans in their most common forms (such as loans less than $3,000) a crime," a news release said. Denish called for imposing caps of 36 percent interest on other small, short-term loans.

Denish said she supports more "consumer-friendly" practices, such as short-term, low-interest loans offered by some credit unions in the state.

The campaign of Republican gubernatorial candidate Susana Martinez didn't respond when given an opportunity comment on the issue.

One representative of the industry pushed back Tuesday, defending payday loans as well as taking a jab at Denish herself.

"The lieutenant governor should be paying more attention to the corruption in the administration she serves, rather than an industry that provides a valuable service to the people of New Mexico," said Steve Kush, spokesman for the Dallas-based Fastbucks chain in a telephone interview. Fastbucks is one of several payday-loan companies doing business in Santa Fe.

"Our rates are there in big print on posters in our offices, not small print like the banks," Kush said. He said overdraft fees for most checking accounts work out to larger percentages than payday-loan interest rates.

Critics say payday lenders target the poor and that the short-term, high-interest loans can trap consumers in a spiral of debt.

Defenders say that payday-loan companies are the only place poor people can go when they have a financial emergency.

Kush said there would be a huge fight in the Legislature if Denish, or anyone, pushed to outlaw payday loans. That's a prediction nobody would dispute.

Efforts to convince the Legislature to set limits on payday-loan interest rates have failed. Such measures have been opposed by the payday-loan industry as well as some mainstream banks.

In 2005, Denish pointed out that 11 lobbyists, including some of the best-known lobbyists in the state, had been hired to work for the passage of a bill that was favored by the payday-loan industry.

In 2007, the Legislature passed and Gov. Bill Richardson signed a compromise bill that Denish backed. She said at the time that the bill, which set some limits on payday lenders, was one of the most important that passed that year.

But on Tuesday, the Denish campaign said that bill had failed. "Predatory lenders found loopholes in the law and continue to trap New Mexico families in loans that carry interest rates as high as 1,000 percent, costing families about $6 million in fees annually. The vast majority of these lenders are owned by large out-of-state firms, draining millions of dollars from New Mexico's economy each year."

Payday-loan companies have poured thousands of dollars into New Mexico campaigns in recent years. In 2008, the Consumer Lending Alliance, an industry group, contributed more than $40,000 into campaign coffers. More than 69 percent of that went to Democratic candidates. About 92 percent went to incumbents.

So far in this election cycle, the biggest payday loan contribution was $28,900 from Fastbucks to Rep. Janice Arnold-Jones, R-Albuquerque, who lost to Martinez in the Republican primary in June.

A Fastbucks lawyer said in June that at least 100,000 people in New Mexico have received loans from his company.

The Susana Martinez campaign responded late Tuesday too late for the print edition.

In an e-mail, Martinez said, "We must ensure that we have strong consumer protections in place against predatory lending, such as caps on interest rates. Further, we must ensure that terms for each and every loan are fully disclosed to the consumer and I support strengthening penalties for companies that take advantage of consumers."


Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com. Read his political blog at roundhouseroundup.com