<\/p>\n\n\n\n
\u201cYou think you\u2019re a big shot. I own you, and I own the legislature,\u201d declared the liquor industry lobbyist, speaking loudly at Santa Fe\u2019s La Fonda hotel, in a banquet room full of legislators and press.<\/p>\n\n\n\n
This legendary event happened in January 1963 at the annual \u201cHundredth Bill Party.\u201d As the legislative session ends, it\u2019s a good story to help us remember where we came from.<\/p>\n\n\n\n
Here is the story as borrowed from David Roybal in his biography of the late legislator and reformer, Fabian Chavez, Jr., titled, \u201cTaking On Giants.\u201d<\/p>\n\n\n\n
The lobbyist was Frank \u201cPancho\u201d Padilla, reportedly a competent lobbyist except when drunk. He accosted Chavez, who was sponsoring liquor reform legislation. \u201cI bought you a thousand times,\u201d he added.<\/p>\n\n\n\n
At that time, Roybal explains, New Mexico law required liquor sellers to mark up the price of their product by certain minimums. Read that sentence again; it is hard to believe. Wholesalers had to mark up a minimum of 17.5% on whiskey, 25% on wine and 20% on beer. For retailers, the minimums were 38.8% on wine and whiskey and 25% on beer.<\/p>\n\n\n\n
In other words, liquor dealers were required by law to maintain windfall profits. No wonder they thought they owned the state. To justify this practice, the argument was that the markup protected small businesses from unfair competition by big businesses. Years later, it looked to me like absolute nonsense.<\/p>\n\n\n\n
A lot like the nonsense about predatory lending.<\/p>\n\n\n\n
Lenders who charge very poor people 175% interest are doing them and society a favor, says the nonsense, because otherwise they would have no recourse. The lenders do them the huge favor of entrapping them into never being able to get out of debt.<\/p>\n\n\n\n
We finally have a law \u2013 passed and waiting for the Governor\u2019s signature — to replace that outrageous interest rate with a cap of 36%. The 36% cap is set by many other states and is in federal law for active duty military personnel. It has been studied extensively and proven to be feasible.<\/p>\n\n\n\n
So why on earth did New Mexico take so long to fix this national embarrassment?<\/p>\n\n\n\n
When the legislation was introduced in 2021, cosponsor Rep. Susan Herrera, D-Embudo, said she couldn\u2019t get the votes she needed. \u201cYou know that elections are bought and sold by this industry,\u201d Herrera said of payday lenders. The language sounded awfully familiar.<\/p>\n\n\n\n
Think New Mexico, a public interest advocacy group, made the issue a top priority for a couple of years. They tried to pair it with a proposal to require financial literacy classes as a requirement for high school graduation, but that was dropped.<\/p>\n\n\n\n
(I disagree on the financial literacy proposal. High school is too late. The students who need that training most are the ones who will not graduate, so financial literacy education should start in fourth or fifth grade.)<\/p>\n\n\n\n
It helps to read the 2021 in-depth analysis by New Mexico Ethics Watch (www.nmethicswatch.org<\/a>) titled \u201cBig Interest in Small Loans.\u201d The report analyzes the influences that have been swaying legislators on this issue \u2013 including a few prominent lobbyists.<\/p>\n\n\n\n The excuse that the poor borrowers will be left out in the cold is, pardon my French, horse hockey. If the storefront lenders all close, another business model will arise that can make a profit on 36% — perhaps the credit unions, who have expressed interest. That\u2019s capitalism. <\/p>\n\n\n\n Please consider asking your own representative, in person, how he or she voted on this matter. Any legislator who voted against this reform does not pass the ethics test.<\/p>\n\n\n\n I would have liked to take a high moral position and recommend that you vote against those legislators in November. Here\u2019s the only problem. Their opponents could be worse.<\/p>\n\n\n\n Triple Spaced Again, \u00a9 New Mexico News Services 2022<\/p>\n","protected":false},"excerpt":{"rendered":" \u201cYou think you\u2019re a big shot. I own you, and I own the legislature,\u201d declared the liquor industry lobbyist, speaking loudly at Santa Fe\u2019s La Fonda hotel, in a banquet room full of legislators and press. This legendary event happened … Continue reading