I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
Democratic Lt. Gov. Diane Denish took aim at a powerful industry Tuesday, promising if elected governor to lobby state lawmakers to make it a crime to engage in the “predatory practices of payday lending,” especially loans involving less than $3,000.
Her target is New Mexico’s payday loan industry, a business that survived — and even has thrived some critics say — since a 2007 law passed to curb abuses.
Persuading state lawmakers to pass a get-tough measure would be a “fierce battle,” Denish acknowledged Tuesday during a mid-afternoon news conference in Albuquerque. But she said the goal isn’t unrealistic despite describing the New Mexico capitol as “crawling with payday lending lobbyists.”
“These are tough times,” Denish said. “Every single legislator is hearing in their community about people in trouble. They’re hearing these stories about payday loans. I refuse to believe that they cannot be convinced that now is the time to take action.
An advocate for the payday loan industry said Tuesday afternoon that outlawing payday loans would deprive a portion of New Mexicans of access to quick loans.
“The consumers need access to short term credit,” said Steven Schlein of the Community Financial Services Association of America, which represents many national payday loan lenders. “By restricting payday lenders you force them to use more expensive options like overdraft protection.”
“We’re obviously serving a need,” Schlein said, adding that the average loan is for $340 – too small of an amount for banks.
In 2007, New Mexico legislators passed a law restricting payday loans after years of fierce legislative battles. But more and more officials acknowledge the statute hasn’t lived up to expectations, leading critics such as Denish to accuse payday lenders of exploiting loopholes to charge exorbitant fees. Attorney General Gary King sued two payday lenders in June 2009 for charging “extremely high rates, in some cases, more than 1,000 percent.”
Other states have outlawed payday loans, an example that New Mexico should follow, Denish said. “We don’t need to be behind the curve,” she said. “We need to be ahead of the curve.”
Denish also called out her opponent, Republican Susana Martinez, for wanting to undo regulations, the implication being that Martinez wouldn’t stand up to the payday lenders as Denish would. Such an attitude, Denish said, would usher in a second Bush era.
But in a statement released by her campaign late Tuesday Martinez said she supported “strong consumer protections” 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,” Martinez was quoted as saying.
Then Martinez took a swipe at Denish, saying “The only record that Diane Denish has on taking on powerful corporations — is when her husband took them on as lobbying clients.”
A large portion of New Mexico’s population — about a third – are “underbanked” or “unbanked,” according to a December 2009 survey by the Federal Deposit Insurance Corporation. That means many in that group don’t use mainstream banking institutions to borrow, but turn to non-mainstream money lenders for loans.
That rate of those not using mainstream banking institutions grew when ethnic groups in New Mexico like Hispanics or Native Americans were analyzed as part of the survey, the report showed.
Ben Heyward, president of First Financial Credit Union, said Tuesday that payday lenders don’t benefit anyone.
“This tremendous need for short-term loans didn’t exist until payday lenders got here,” said Heyward, who helped lobby lawmakers to pass the 2007 law and attended Denish’s news conference Tuesday.
“They created this demand,” he said.
Other states have passed usury laws, Heyward said. Once those statutes were on the books the businesses disappeared and the “demand went away. It’s going to happen here. The demand didn’t exist until they came along. And once they’re gone the demand will go away. There are plenty of lenders who make cheap money available to families here in New Mexico.”
Schlein questioned Heyward’s motivation.
“I don’t understand how a businessman can speak that way,” Schlein said. “It’s a strange way for a businessman to talk.”
