Written by Ona Porter
This entry continues our series highlighting the work of our allies in New Mexico and the common good in action. Click here to read the first entry.
Politics before governing is an operating policy that has allowed a tiny minority to continue rigging the American Dream for their own benefit.
There is no better evidence of this than in the legislative session that just concluded in NM in which our efforts to cap all storefront lending at 36% was dead on arrival!
Over $100 million is bilked annually from customers of payday, installment and title lenders charging average interest rates of over 300%. The customers in this case are largely the working poor, and people on fixed incomes who are trying to fill the documented 30% gap between their monthly income and their expenses. When juggling payments and borrowing from Peter to pay Paul does not work, desperate and vulnerable people often are attracted to predatory loans that invariably turn temporary financial shortfalls into long term financial crisis.
Interest cap rates have overwhelming support from consumer financial advisors, the faith community, local governments and newspapers statewide, anti-poverty advocates and the general public. They have proven to be an effective consumer protection policy in many states without creating any of the ill effects that small lenders threaten will occur. The only organized opposition to 36% interest caps comes from the predators themselves…and they come with an army of powerful lobbyists with their pockets full of cash and favors.
Popular support, research, and legal authority on predatory lending and the value of the 36% cap rate as the public policy needed to protect consumers stood little chance when faced with the overwhelming influence of money in politics… and the common good was not only disregarded; it was trampled.
When inequality is the greatest threat facing our nation, the “fierce urgency of now” could not be clearer today than it was 50 years ago. Predatory lending is a structure of poverty that is licensed by our state and condoned by our legislature. It must be dismantled, and the practice of our legislators neglecting NMs most pressing issues in favor moneyed interests must end as well.
Ona Porter is the President and CEO of Prosperity Works and Co-Chair of New Mexico Fair Lending Coalition.