Governor Michelle Lujan Grisham and members of the New Mexico state legislature caught fire for choosing not to blindly follow certain other states, and instead working with stakeholders to explore how major changes in the low dollar loan system could have an impact on New Mexico consumers. Critics have gone so far as to say that the lack of leadership is the reason our policymakers did not quickly align themselves to make sweeping changes that impact all consumers in the state. Given the current economic climate and growing evidence that the changes haven’t helped consumers as expected in other states, I applaud these pragmatic decision-makers for taking the time to make sure they get it right.
Disagree is a proposal to cap interest rates on consumer loans at 36%. Earlier this year, the state Senate passed a bill supporting the measure, but the state chamber did not agree and instead sent back a revamped proposal. Since then, the governor has worked with lawmakers in the House and Senate as well as with industry stakeholders to investigate the issue and work towards a compromise.
Decisions made right now, as families grapple with the health and economic impacts of the COVID crisis, will be among the most important made in generations. They will affect people in our state and around the world for years to come. With that in mind, we simply cannot afford to go wrong.
It is useful to know that other states have adopted a cap rate of 36%. Even if the measure worked as intended in other states, that would not be a sufficient reason to adopt it here. After all, one size doesn’t fit all. It is the duty of our decision makers to determine whether political reforms are good for our state before making any decisions.
In the states that instituted the aforementioned cap, borrowers still take out loans above the threshold, but they are now forced to resort to less reliable and often less scrupulous lenders than those they used before the caps were introduced. – consumers at risk are particularly affected. credit scores and minorities.
When I hear this, I can’t help but think of communities like the International District of Albuquerque, which is often and imperceptibly referred to as the “war zone.” Before the pandemic, about half of the neighborhood’s residents were below the federal poverty line, meaning one in two residents lived in poverty. Language, education and barriers to employment are key elements of a cycle of disenfranchisement that has long barred those who inhabit the International District from participating in job creation and participation. higher education, thus perpetuating the cycle of poverty. Losing access to credit could be devastating for many in this community – and other diverse communities across our state.
Racial and socio-economic inequalities have existed – and have held us back – for far too long. Studies have shown that there is tremendous economic potential for New Mexico residents and their communities if we remove barriers so that all families and their children have the opportunity to thrive. Specifically, our state can achieve $ 93 billion in economic output by 2050 if we close some of the racial gaps that exist in areas like health and education. The key to this will be to ensure that all communities have equal access to financial resources. Financial safety nets and hand-ups are hallmarks of a strong democratic civilization.
Looking forward to the next session, policymakers should continue to tackle difficult issues with a collaborative approach that ensures the best solution for New Mexicans. I encourage our leaders to find collaborative ways to protect consumers while allowing the most vulnerable members of our community to have financial resources more easily and not.
Tierna Unruh-Enos is Editor-in-Chief and Associate Editor of The Paper.