The past two years have been financially challenging for families in New Mexico. Thousands lost their jobs and/or businesses, while others were forced to take furloughs to stay home with sick relatives or to be with children as schools moved to a virtual platform. During the toughest economic downturn of our lives, communities turned to New Mexico credit unions for help.
Most of the state’s 40 credit unions provided affordable loan options to ensure members could maintain their livelihood and dignity by providing advances on federal employee salaries and small dollar loans at fair rates to working families. These types of lending programs helped countless New Mexicans, but the sudden economic downturn exacerbated an ongoing problem, predatory lending.
The Credit Union Association of New Mexico wants to work with government officials to create fair regulations that protect our citizens by prohibiting unreasonably high-interest loans. History has shown that widespread economic uncertainty and crises lead to an increase in opportunistic business practices that prey on the most vulnerable.
During the pandemic, far too many New Mexicans were forced to take out short-term, very high-interest loans to make ends meet. Interest rates on these loans range, but many borrowers pay up to amazing rates
175 percent interest rate, often with hidden provisions that charge the borrower additional fees. These predatory lending practices unfairly target working families and prioritize profit over the welfare of the community.
Credit unions have a generational history of helping communities in tough times by offering affordable credit options and helping when members need it most. Credit unions from every corner of our beautiful state have provided more than double 2019’s total lending over the past 22 months, matching total lending growth
6.6 percent by the third quarter of 2021.
I’m proud that credit unions have continued to help their members get through tough times, but we need help. While neighboring states have enacted a number of laws to protect consumers and regulate the high fees and interest rates on payday loans, New Mexico has done little to protect its citizens.
We must create sensible rules to protect consumers. We call on legislators to negotiate an agreement for robust consumer protection within the next week
12 months. As Gov. Michelle Lujan Grisham works with lawmakers to implement policies that improve the well-being of New Mexicans, we look forward to working together to put families first.
Juan E. Fernández Ceballos is President and CEO of the Credit Union Association of New Mexico.
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