Lobbyist Raymond Sanchez
By MILAN SIMONICH
The Santa Fe New Mexican
Seldom have smooth, moneyed lobbyists such as Raymond Sanchez taken such a terrible beating.
Sanchez for years transformed members of the New Mexico House of Representatives into toadies for the storefront lending industry that charges an annual interest rate of 175 percent.
Every attempt to lower the rate ended in defeat, usually because a mass of House members stuck up for lenders at the expense of impoverished consumers.
That ugly history dissolved late Monday when the House voted 51-18 for a reform measure that had languished for almost a decade.
House Bill 132 would reduce the maximum annual interest rate from 175 percent to 36 percent on most installment loans. An amendment to the bill allows for an additional 5 percent fee on loans of $500 or less.
The proposal next moves to the Senate, where a similar bill for a 36 percent cap passed easily last year, only to be blocked by a group of House members.
Sanchez, himself a former speaker of the state House of Representatives, will continue trying to stop HB 132. But his best chance to defeat the reformers has slipped away.
Sanchez and an army of other lobbyists had always been able to control the House debate with a hackneyed argument. They claimed a “low” 36 percent cap would preclude companies from making risky loans to people who needed cash for an emergency.
Rep. Phelps Anderson of Roswell, the only independent in the House, challenged the industry’s claims and then co-sponsored the reform bill.
Anderson, from the family that founded Atlantic Richfield oil company, knows the corporate world. He said an interest rate of 36 percent is more than enough to make small loans a profitable venture.
Republican legislators typically had closed ranks to help storefront lenders, arguing the free market should establish loan rates. Their firewall collapsed Monday.
Eight Republicans voted for the 36 percent cap. Newly appointed Rep. Brian Baca of Los Lunas was one of them. Freshman Rep. Joshua Hernandez of Rio Rancho was another who took a stand for consumers.
Also voting for the bill was Rep. Cathrynn Brown, an attorney from Carlsbad and perhaps the most conservative member of the Legislature. She seldom supports initiatives by Democrats but made an exception for a bill to drive out predatory lenders.
They bucked their party’s leadership. Rep. Rod Montoya, the Republican whip from Farmington, resorted to false claims. Montoya said credit unions can charge 55 percent interest rates, but storefront lenders were to operate at a lower rate.
His statement brought a fast rebuttal from Juan Fernández, president and CEO of the Credit Union Association of New Mexico. Credit unions charge no more than 28 percent on loans. They are outnumbered 3 to 1 by storefront lenders, but credit unions offer a better deal for consumers.
Forty-two Democrats voted for the reform bill, including Rep. Tara Lujan, D-Santa Fe. The issue was personal for her.
“I took out one of those high-interest loans while in my early 20s,” Lujan told me. “I was fortunate to be working full-time. I paid off the loan as soon as I could after I realized how much it was costing me.”
Rep. Susan Herrera, D-Embudo, carried the reform measure again this year.
“It’s really a financial pandemic,” she said of triple-digit loan rates.
Herrera made a smart move by mentioning the rate of 36 percent was endorsed by groups ranging from the Navajo Nation to the New Mexico and Hispano chambers of commerce.
Two Democrats still voted against the measure to cut the interest rate. They were Reps. Eliseo Alcon of Milan and Ambrose Castellano of Las Vegas.
Alcon last year carried the industry’s pitch. If there had to be a reduction in the interest rate, he said, it should be to 99 percent.
His rewriting of the bill started a clash with the Senate. The confrontation led nowhere, but that kept 175 percent interest rates in place.
Other Democrats drifted away from supporting a more recent call for a 99 percent interest rate on loans of $1,100 or less.
Reps. Dayan Hochman-Vigil of Albuquerque, Patty Lundstrom of Gallup and Micaela Cadena of Mesilla introduced a bill seeking 99 percent rates on smaller loans and 36 percent for larger ones.
They didn’t try to amend Herrera’s bill by pursuing the higher rate. Instead, Cadena sponsored the tamer amendment for a 5 percent fee on loans of $500 or less.
The night’s most obvious flip-flop came from retiring Rep. Daymon Ely, D-Corrales. It was Ely who pushed through a floor amendment last year that would have expanded the 99 percent interest rate.
Not this time. Ely picked up his microphone and endorsed Herrera’s bill for 36 percent rates. He called her proposal one of the more important measures he’d seen.
It was just as important last year. What’s changed is 2022 is an election year.
A riled voter base is tired of 175 percent interest rates. All those voices finally drowned out Sanchez and the rest of the lobbyists.
Ringside Seat is an opinion column about people, politics and news. Contact Milan Simonich at msimonich@sfnewmexican.com or 505.0986.3080.