New Mexico House finally sees the light on 175% interest rates | Legislature | New Mexico Legislative Session

Rarely have slick, wealthy lobbyists like Raymond Sanchez received such a terrible beating.

For years, Sanchez has turned members of the New Mexico House of Representatives into toads for the storefront loan industry that charges a 175% annual interest rate.

Every attempt to lower the rate ended in failure, usually because a mass of House members defended the lenders at the expense of impoverished consumers.

That ugly story dissolved Monday night when the House voted 51 to 18 for a reform measure that had languished for nearly a decade.

House Bill 132 would reduce the maximum annual interest rate from 175% to 36% on most installment loans. An amendment to the bill allows for a 5% surcharge on loans of $500 or less.

The proposal then goes to the Senate, where a similar bill for a 36% 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 to try to stop HB 132. But his best chance of defeating the reformers has slipped away.

Sanchez and an army of other lobbyists had always been able to control debate in the House with a hackneyed argument. They claimed a “low” cap of 36% would prevent companies from giving risky loans to people who needed cash in 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 the Atlantic Richfield oil company, knows the corporate world. He said an interest rate of 36% was more than enough to make small loans a profitable business.

Republican lawmakers typically had tight ranks helping showcase lenders, arguing that the free market should set lending rates. Their firewall collapsed on Monday.

Eight Republicans voted for the 36% cap. Newly appointed representative Brian Baca of Los Lunas was one of them. Freshman representative Joshua Hernandez of Rio Rancho was another who took a stand for consumers.

Rep. Cathrynn Brown, a Carlsbad lawyer and perhaps the most conservative member of the Legislative Assembly, also voted for the bill. She rarely supports initiatives by Democrats but has made an exception for a bill aimed at hunting down predatory lenders.

They resisted their party leadership. Rep. Rod Montoya, the Republican Whip for Farmington, resorted to misrepresentation. Montoya said credit unions can charge 55% interest rates, but storefront lenders must operate at a lower rate.

His statement brought a swift rebuttal from Juan Fernández, president and CEO of the Credit Union Association of New Mexico. Credit unions charge no more than 28% on loans. They are outnumbered 3 to 1 by storefront lenders, but credit unions offer a better deal to 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 these high-interest loans in my early twenties,” Lujan told me. “I was lucky enough to work full time. I repaid the loan as soon as I could after realizing how much it was costing me.”

Rep. Susan Herrera, D-Embudo, carried the reform measure again this year.

“It really is a financial pandemic,” she said of the triple-digit lending rates.

Herrera made a smart move by mentioning that the 36% rate was endorsed by groups ranging from the Navajo Nation to the New Mexico and Hispano Chambers of Commerce.

Two Democrats still voted against the interest rate cut measure. They were representatives Eliseo Alcon from Milan and Ambrose Castellano from Las Vegas.

Last year, Alcon set the tone for the industry. If there were to be an interest rate cut, he said, it should be 99%.

His rewriting of the bill sparked a clash with the Senate. The confrontation led nowhere, but it kept interest rates in place at 175%.

Other Democrats walked away from supporting a more recent call for a 99% interest rate on loans of $1,100 or less.

Representatives Dayan Hochman-Vigil of Albuquerque, Patty Lundstrom of Gallup and Micaela Cadena of Mesilla introduced a bill asking for rates of 99% on small loans and 36% on larger ones.

They did not try to alter Herrera’s bill by pursuing the higher rate. Instead, Cadena sponsored the Tamer Amendment for a 5% fee on loans of $500 or less.

The most obvious flip-flop of the night came from outgoing rep Daymon Ely, D-Corrales. It was Ely who pushed through a floor amendment last year that would have raised the interest rate to 99%.

Not this time. Ely took his microphone and approved Herrera’s bill for 36%. He called his proposal one of the most important measures he had seen.

It was just as important last year. What has changed is that 2022 is an election year.

A pissed off voter base is fed up with 175% interest rates. All of these voices eventually drowned out Sanchez and the rest of the lobbyists.

Ringside Seat is an opinion column about people, politics and current affairs. Contact Milan Simonich at or 505-986-3080.

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