Payday on the Floor
Regulations for payday, car title and tax refund loans are back in the Legislative Session
By Amy Dalness
Sen. Bernadette Sánchez is serious about payday lending regulations. So serious, she killed a bill in the Senate in last year's session because she believed it was too lenient on the lenders.
"They tried that bill in a lot of states," says Sánchez. "It hasn't worked and the industry has been behind it. It's an industry bill."
The bill was sponsored by Rep. Patricia Lundstrom and has been reintroduced in the House this session. The bill would further define payday loans, require licenses for businesses offering loans under $2,500 and would include a database of all payday loan recipients and lenders.
Yet Sen. Sánchez, the same legislator who halted the payday lending bill last year, will also propose a bill to regulate payday loans and other forms of predatory lending this year. Sanchez' bill is consistent with the regulations included in the John Warner National Defense Authorization Act, which was signed into federal law in September 2006. An amendment within the act included a 36 percent annual rate cap for payday loans given to military personnel and their families.
"I can't imagine that the State Legislature and the governor would sign something with less protection for our nonmilitary people," she says.
Sánchez' bill would also disallow rollovers, renewals or consolidation of loans with the same lender in addition to the usury cap, she says. "It's doing away with predatory lending."
As it remains now, New Mexico is still one of few states without any regulations on payday lending. In June 2006, the Regulation and Licensing Department (RLD) was poised to enact regulations designed to limit fees, end interest and offer payback options to payday loan consumers, but were stalled by an injunction granted due to two separate lawsuits filed by Check ’n Go and Fast Bucks, national payday loan companies with stores in New Mexico. Second District Judge Richard Knowles ruled in favor of the payday lenders, agreeing the Legislature had not granted RLD the authority to issue the rate caps, says RLD Superintendent Edward J. Lopez, Jr.
The Regulation and Licensing Department is appealing Judge Knowles' ruling, and the regulations are currently at the New Mexico Court of Appeals, says Lopez, but RLD and the governor would like to see payday loan regulations come from this year's Legislative Session.
"We prefer a more permanent, legislative solution," says Lopez. "Because the Legislature failed to reach a legislative solution last year, we felt it was important to do something between sessions."
If any bills are signed into law this session, the regulations would not be necessary. But if nothing is passed, the regulations could be the only thing protecting New Mexicans from predatory lending.
"There is no protection and that is unacceptable," says Lopez. "Something must be done as soon as possible, whether its legislative or otherwise. People are being severely hurt."
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