Before a law in 2022 capped interest rates on small loans — available at places like the Check ’n Go on Cerrillos Road, seen in 2022 — at 36%, several politicians worked to keep storefront lending rates high, columnist Milan Simonich says.
Before a law in 2022 capped interest rates on small loans — available at places like the Check ’n Go on Cerrillos Road, seen in 2022 — at 36%, several politicians worked to keep storefront lending rates high, columnist Milan Simonich says.
Republican congressional candidate Yvette Herrell leans on a straightforward campaign slogan. She says she stands for “commonsense New Mexico values.”
Too bad she had no interest in common people or horse sense when, as a state representative, she co-sponsored a bill that abetted predatory companies.
Storefront lenders were charging annual interest rates typically ranging from 300% to 400%. Most of the cash they raked in flowed from low-income New Mexicans to out-of-state parent corporations.
Pressure eventually intensified on state legislators to stop government-authorized usury. This reform movement was of no particular concern to storefront lenders or their lawyers and lobbyists. They knew they could continue living high on the hog if they reined in their excesses.
Their magnanimous maneuver was to devise a bill in 2017 to cap storefront lending rates at 175%.
While carrying the proposal, Herrell described it as a fair compromise. She said she wanted to protect consumers while being pro-business. Pro-loan shark would have been more accurate.
The law that established 175% rates changed almost nothing for downtrodden consumers. Most were trapped in a cycle of debt as corporations based elsewhere continued profiteering. Storefront operators guarded against a political insurgence by making financial contributions to key legislators and their PACs.
By 2022, Herrell was a freshman member of Congress as a revolution for fairness at last swept across the state Capitol.
New Mexico senators for a second consecutive year marshaled more than enough votes to cut the annual storefront lending rate from 175% to 36%, still high but well below the oppressive rate coveted by the industry.
Then-House Speaker Brian Egolf, D-Santa Fe, remained pessimistic. He told me several times he didn’t have the votes in his 70-member chamber to pass the Senate’s bill. His counting must have been flawed.
House members approved the rate reduction in a 51-18 blowout. Forty-two Democrats, eight Republicans and one independent voted for sanity. Only two Democrats, Ambrose Castellano of the Las Vegas area and Eliseo Alcon of Milan, stuck with the storefront lenders.
Lingering effects from the issue of predatory lending have been felt in each of the last four legislative elections.
Democratic Rep. Debbie Rodella, like Herrell a co-sponsor of the 175% rate, lost her seat in the 2018 primary. Rodella had been in office for 26 years. The Española area she represented had more than its share of poverty and exorbitant interest payments, leaving it ripe for a change in legislators.
Another of the bill’s sponsors, Republican Rep. Jane Powdrell-Culbert, lost to a Democrat in 2022.
Sens. Clemente Sanchez and Mary Kay Papen, who opposed attempts to cut the rate to 36%, lost their seats in the 2020 Democratic primary election. Sanchez attempted a comeback to the Senate this year, but he lost again in the primary.
Castellano also was defeated in this year’s primary. He had plenty of baggage, most notably a $75,000 state tax lien on his construction business. But Castellano’s vote to keep interest rates in triple digits helped his opponent, Anita Gonzales. She broke through after twice losing close races to Castellano.
As for Herrell, after her efforts in establishing the 175% interest rate, she ran for Congress in 2018. She lost in New Mexico’s 2nd District, a seat Republicans had held for 36 of the prior 38 years.
Herrell rebounded in 2020 to win the congressional seat, only to lose it after one term to Democrat Gabe Vasquez. Gerrymandering that diluted some of Herrell’s base aided Vasquez, but several of Herrell’s policy decisions also damaged her.
Her first act as a congresswoman was to vote against certifying President Joe Biden’s victories in Arizona and Pennsylvania. Herrell supported Donald Trump’s false claims the election was stolen from him.
She also voted against a bill to preserve same-sex marriages, a measure co-authored by Republican Sen. Susan Collins of Maine and signed into law by Biden. He said he feared the Supreme Court’s Republican majority would reverse an earlier ruling sanctioning same-sex marriages.
Household economics is a substantial part of Herrell’s fourth campaign for Congress this year. One plank in her platform is “creating jobs and opportunity.” To that end, Herrell says she wants “lower prices on everything from groceries to gas.”
She hopes to leave no doubt she’s looking out for the little guy.
And no one should forget Herrell stood for lower-interest loans — provided they comported with the storefront lending industry’s guideline of 175%.
Ringside Seat is an opinion column about people, politics and news. Contact Milan Simonich at msimonich@sfnewmexican.com or 505-986-3080.
