House Democrats today held a press conference highlighting their Economic Security Package — a group of bills that will spur economic growth and protect working families throughout the state.
One of those bills, Democratic Minority Leader Brian Egolf’s “Small Business Development Fund Act” (HB 28), would create a $100 million Small Business Development Fund that would work with community banks on economic development projects throughout the state.
Here’s a synopsis of HB 28 from the Legislative Finance Committee:
House Bill 28 is the Small Business Development Fund Act; it creates the Small Business Development Fund (Fund), a board of directors with staggered terms, and allows up to $100 million from the severance tax permanent fund to be invested in the Small Business Development Fund to participate in loans with community banks for economic development projects. Up to $5 million of that investment may be used to establish and operate the Fund. The remainder shall be used to fund the loan program as set forth by the act.
Rep. Gail Chasey and Rep. Lucky Varela also presented two pieces of legislation at the press conference.
Rep. Chasey’s “Loan Interest Rate Caps” would cap predatory lending rates at 36% (the average interest rate for short term loans in New Mexico is around 340%). Gwenyth Doland of New Mexico In Depth wrote an extensive piece on the fight over predatory lending rates yesterday that outlines what’s at stake and the army of lobbyists the payday loan industry has hired to retain the status quo (a status quo in which there is currently NO LIMIT on the amount of interest loan sharks can charge customers):
“We are one of the only states in the nation that doesn’t have a usury law and we are the laughing stock of the nation,” Ona Porter of Prosperity Works said Monday. “The whole business model is predicated on the idea that people can’t repay their loans.”
Supporters of reform have launched a website, LoanSharkAttack.com, to promote their cause.
Polls have shown that more than 85 percent of New Mexicans support caps on the loans. And at least in public, the loans are politically unpopular; the cities of Albuquerque, Santa Fe, Alamogordo and Las Cruces have all passed resolutions in support of limiting interest rates.
But the industry’s lobby remains very powerful. Lenders and industry associations reported pouring more than $13 million into politics at the national level last year, according to a recent report from Americans For Financial Reform.
Rep. Varela also discussed his $10.10 minimum wage law as a part of the Democrats’ Economic Security Package. We profiled Rep. Varela’s bill earlier this legislative session.