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Court wacks payday-loan rules

August 31, 2006 - Albuquerque, New Mexico

Tough new rules set to go into effect today to regulate payday lenders are on hold after a District Court judge ruled the governor and attorney general exceeded their authority.

District Judge Richard Knowles issued the preliminary injunction Wednesday after deciding state lending law limits regulation of lenders to action by the Legislature.

The community-activist group ACORN rallied outside the FastBucks office at Central and Coors NW to protest the judge's ruling in particular and payday lending in general.

Gov. Bill Richardson and Attorney General Patricia Madrid had attempted to use their administrative powers to limit payday loan rates, fees and rollovers. A bill imposing similar regulations failed to pass during 2006 session of the Legislature.

ACORN and the AG said interest rates on payday loans can top 500 percent a year trapping consumers in a pattern of unlimited recycling of debt.

However the judge ruled restrictions on these loans should be put in place by the Legislature passing laws not the governor imposing them.

Payday companies agreed with that, but ACORN said New Mexico is being singled out because the companies already follow similar restrictions in other states.

"The lenders such as Money Mart, FastBucks, and E-Z Payday Loans follow these same particular rules in other states," Michael Taylor of ACORN said. "We don't understand why they say in this state they're illegal and unjust.

"They're already doing it in other states; why can't they do it within our state?"

Payday companies contend their own survey shows less than two percent of their consumers favor restrictions on the loans

The governor and the AG plan to appeal the judge's ruling.

News Source

KRQE News 13, Greg Gurulé, Reporter

Related Stories - ACORN

Related Stories - New Mexico

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