Loan interest rate cap bill fails to reach the finish line

SANTA FE – Bill to lower New Mexico’s small loan interest rate cap – to 36% from 175% – will not pass through both legislative chambers until the end of the 60-day session Saturday, his sponsor said Friday night.

Senator Bill Soules, D-Las Cruces, said the House and Senate were essentially at an impasse after passing different versions of the loan bill.

As both legislative chambers appointed members to sit on a conference committee to try to find a compromise, Soules said a real conference committee meeting would not take place because House members wanted to negotiate. .

“He’s basically going to die stuck between the two chambers,” Soules told The Journal.

He said debate on the issue would continue and expressed optimism. Governor Michelle Lujan Grisham could add it to the agenda for next year’s 30-day session.

The original version of the bill, Senate Bill 66, limited annual interest rates for storefront loans to 36%. It was passed in the Senate this month by 25 to 14 votes.

But the proposal was changed in the House over fears that the bill would make it impossible for some New Mexicans who need quick access to small amounts of money to get loans.

The House eventually passed a revised version of the bill that included two caps – one of 99% for loans of $ 1,100 or less and one of 36% for larger loans.

“We are disappointed – we thought we had found a good compromise,” said Rep. Susan Herrera, D-Embudo, another sponsor of the bill.

While they disagreed on the details, Herrera and Soules also acknowledged the role that credit industry lobbyists played in thwarting the original legislation.

Supporters of the original measure had argued that it would protect vulnerable New Mexicans while strengthening the state’s economy by keeping residents out of “debt traps.”

But critics of lowering the maximum annual rate cap for small loans argued that such a policy change could bankrupt many businesses and push borrowers to use internet lenders, many of whom are based in the United States. other countries and cannot be regulated.

This year’s Roundhouse debate took place four years after the Legislature passed legislation setting the current cap on small loan interest rates at 175% and banning payday loans with terms of less than 120 days.

The 2017 legislation was presented as a compromise after years of debate on Capitol Hill over payday loans.

But critics have insisted that the 175% cap is too high for low-income New Mexicans, while noting that the US military has put in place a 36% annual percentage rate limit for those with low incomes. loans obtained by servicemen on active service.

“We have to do a better job for New Mexicans,” Herrera said.