Some underserved residents still need access to lending

Over the weekend I read a commentary in The Santa Fe New Mexican opining the state lacked leadership when it came to regulating New Mexico’s lending industry (“Leadership lacking in ending New Mexico’s 175 percent interest rate,” Ringside Seat, Dec. 13). While parts of the piece merit real consideration, the crux of the issue is access to credit for the most vulnerable in our communities. It’s generally a responsible piece; however, I think some examples posited require a deeper look.

For example, while it’s accurate 18 states have rate caps, only three actually have the hard 36 percent rate cap to which the article referred. The other remaining states are flexible. For example, Ohio excepts payday lenders and Arizona title loans. Such exemptions aren’t an issue for New Mexico, as it is well known such predatory lenders are effectively banned in the state. The piece touts the success of the Military Lending Act’s rate cap. Earlier this year, a survey by the National Foundation for Credit Counseling found active-duty service members were more than twice as likely to take out a cash advance or payday loan in 2020 than in 2019.

All New Mexicans need access to credit, and many don’t have a credit score or bank account for the kind of options perhaps many reading this take for granted. Is the 36 percent rate cap the correct vehicle to protect consumers, or would it will dry up credit for underserved communities? When they choose to address this issue, let’s make sure the state Legislature gets this right for our state.

Chad Cooper Vice chair New Mexico African American Chamber Albuquerque