Government and legislature should act on high interest loans

In the first week of the 2022 legislature, lawmakers introduced several bills that would lower New Mexico’s unreasonable 175% interest rate cap on small loans to 36%. But the Legislature won’t even be able to discuss such measures during the current 30-day session without an official “message” from Governor Michelle Lujan Grisham.

However, at least so far, the governor has not indicated that she is willing to send such a message. In 2021, the legislature nearly passed a bill that would have dramatically reduced excessive interest rates on small installment loans in the state. Last year’s Senate Bill 66 would have capped rates at 36%, as many other states do. The bill passed the Senate by a good margin, but went off the rails in the House of Representatives, which passed a watered-down version backed by a coalition of Republicans and Democrats — including a large number of progressives. The bill died at the end of the session before a conference committee convened to attempt to resolve differences.

New Mexico Ethics Watch recently released a report, The Big Interest in Small Loans. We analyzed the effect of storefront loan companies on their customers, how this state compares to others, the history of usury laws in New Mexico, industry campaign contributions, messages lobbyists for these companies and other aspects of installment lending.

So far, at least three bills similar to last year’s SB 66 have been introduced in the Legislative Assembly: SB 107 by Democrats Bill Soules and Katy Duhigg, SB 129 by Republican Gregg Schmedes and HB 78 by Democrat Patricia Caballero. All three would reduce the current interest rate to 36%. Although the governor has expressed the idea of ​​ending high interest rates, a recent statement from his press office to reporters is not encouraging. Its spokesperson wrote: “We are not prepared to compromise the importance of the issue by adding it to the agenda without a good faith consensus among stakeholders that will result in substantial action and protections for New Mexicans”.

However, seeking “consensus” here essentially means giving storefront lenders a veto over legislation that would essentially amount to a pay cut for their industry and still leave poor New Mexicans vulnerable. Kathleen Sabo, executive director of New Mexico Ethics Watch, said, “The longer we wait for good, common sense legislation to rid New Mexico of excessive interest rates, the longer the poor will have to suffer. We call on Governor Lujan Grisham to send a message and let the debate in the Legislative Assembly begin.

As our report shows, the small loan industry helps keep low-income people in a vicious cycle of debt. We highlight how the industry targets Native Americans: the city of Gallup has about 40 loan stores, even though its population is only 22,000.

Our report shows how these high-interest loans suck up money from the state, as nearly all of the major lending companies are headquartered outside of New Mexico. And it examines how self-serving the industry argument that these high-interest loans are necessary to help the poor is, even though it has been swallowed by many lawmakers and lobbyists.

New Mexico Ethics Watch urges Governor Lujan Grisham to give his full support to legislation to reduce interest rates on small loans. And we urge lawmakers to reconsider their reluctance to support this important move toward fair lending. Our report, The Big Interest in Small Loans, is available at

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