Storefront lenders won another victory Wednesday night, convincing a Senate panel to table a bill that would have capped interest rates on loans at 36 percent.

The Senate Corporations and Transportation Committee stopped the bill from advancing on a 6-3 vote.

Three Democrats and three Republicans voted against the cap. But one of them, Democratic Sen. John Sapien of Corrales, said he only opposed the bill so he later could use a parliamentary maneuver to revive it. Several senators said they hoped proponents of the loan cap could find middle ground with the industry for a compromise.

Sen. Mimi Stewart, D-Albuquerque, who voted for the bill, had a tart response.

“I just don’t believe this industry wants to compromise,” Stewart said.

She said she would buy dinner for the 10-member committee if the industry actually reached an agreement with proponents of the cap.

The state attorney general, Hector Balderas, clergy members and numerous city and county governments have endorsed capping loan rates at 36 percent. Seventeen states already have caps at that rate or even lower.

But storefront lenders came to the hearing with heavyweight lobbyists, including a former Republican attorney general of New Mexico and a former Democratic speaker of the state House of Representatives. Their message was that a 36 percent cap on loans would dry up credit for the most needy people and wreck well-established lending businesses.

One lobbyist, Scott Scanland, said he represents a lending company with 12 stores in New Mexico that pays its employees average salaries of $24,000 a year with benefits.



“This bill will kill jobs because my client will go out of business,” he said.

Democratic Sen. Bill Soules of Las Cruces, the bill’s sponsor, said storefront lenders charge interest rates of more than 400 percent and trap borrowers in a cycle of debt that only deepens as loans are extended.

But Sen. Mark Moores, R-Albuquerque, said a cap of 36 percent sounded arbitrary.

“Why are the 112 of us [legislators] in this building smarter than the free market?” Moores said.

Moores said “Guido on the corner” is the real predator in loans, not storefront businesses. Soules quickly criticized Moores for injecting race into the debate. Moores seemed puzzled, not realizing that Italians often are stereotyped as organized crime members who specialize in loan-sharking.

A few people in the industry said a bill sponsored by Sen. Steve Neville, R-Aztec, is more to their liking. The committee chairman, Sen. Phil Griego, D-San Jose, said he had hoped Soules and the industry would have gotten together to work out a bill that both sides could live with.

But Neville’s bill was only introduced Monday, after Griego finally agreed to give Soules’ bill a hearing. Soules had pre-filed his bill in December.

Two other bills to cap loan rates at 36 percent previously were tabled by a committee in the House of Representatives. If Soules’ bill is not revived, all the measures would likely be dead until the next 60-day legislative session in 2017.

Contact Milan Simonich at 986-3080 or msimonich@sfnewmexican.com. Follow his Ringside Seat column and blog at santafenewmexican.com.

(14) comments

Jonathan Delafield

So that's it? We're done? So, this extortion goes on for at least two more years, because big money talks? Endorsed by the legislature through inaction. Whose legislature is this anyway?

Rick Gonzales

The article states that the ". . .36 percent cap on loans would dry up credit for the most needy people. . .". Most regular lenders; like mortgage companies and credit unions, will say that these loans hurt a credit score and make it difficult to get a loan from them. This then "traps" needy people into these high interest loans since it now becomes their only option.

Hard to understand how a "lobbyist" can keep Reps from understanding both sides of issues. Getting free lunches, dinners, and parties makes it seem like our Reps are Easy to Sway and Needy people can't afford to hire a lobbyist and can't afford a loan to get one either.

Emanuele Corso

So whats with this "Guido" slur? This guy is a serious problem if he doesn't recognize an ethnic slur - which I suspect he does. I'll give him "Guido"!

S. Ulrich

Leeches.

JL Barry

"But storefront lenders came to the hearing with heavyweight lobbyists, including a former Republican attorney general of New Mexico and a former Democratic speaker of the state House of Representatives."

Do these people have names?

Khal Spencer

I'm old enough to remember when even the Mafia would be embarrassed by these rates. Its amazing that the Senate would throw the poor under the bus.

Jonathan Delafield

Much as it's tempting to suspect corruption, I suspect that it's much simpler, but just as damaging. Money talks. I don't mean graft. I just mean that the big money lenders have the money to hire lobbyists and the big bosses can take time off to travel to Santa Fe and button-hole our legislators. So, who has the time or money to lobby for the poor in our community? This a misbalance that guarantees that our legislators get a warped view of public opinion.

So, now they get away with it for two more years?

Julian Grace

Just goes to show that these so-called elected representatives are there to represent the population but not when it comes to the deep pockets of this type of financial practitioner. Sad to see someone stuck in that cycle of borrow/pay borrow/pay because I've been there, if only the borrowers would get smart and quit giving in these vultures would just die a natural death.

Comment deleted.
Mark Ortiz

And thank you SFNM for reminding your readers who one of the biggest and unapologetic whores the City of Santa Fe has EVER known, POS FAT cat Phil Griego.

Carolyn DM

Those voting against it are as sleazy as the sewer scum that charge these rates.

Elizabeth Pettus

Regulating the "free markets" Is what decent governments do....the 1934 investment act forbade the appalling practices that precipitated the crash, Governemnt stepped in to prevent war profiteering, consumer fraud, the continuance of love canal style destruction - yes the government controls
some greed for the sake of us all. 36 percent is horrifying usury-
Let's stop it.

Jonathan Delafield

Mark Moores, R-Albuquerque, said:

“Why are the 112 of us [legislators] in this building smarter than the free market?”

That's because the free market is neither smart nor dumb. It just is ... and it mindlessly responds to the forces put on it. If you only allow forces of business greed, then you get these kind of distortions. That's why we regulate, to make it responsive to our entire community and not just the single minded quest for profit from these business owners.

Haven't we learned from experience in these last 30 years, that unregulated free markets are not religious dogma?

Mike Johnson

I find this amazing, these snakes that take advantage of poor people as a business have this much influence on these Senators???? How much money are they giving these politicians to buy these votes? Isn't there anyone who wants to see the corruption going on here?

Mike Palaima

We agree, Dr Johnson!

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