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Limiting Profitability

It looks like the payday loan issue is going to be on the table again during this legislative session, and I can’t help but wonder why.

Efforts to reach consensus on payday-loan legislation have failed for years. This year, the loan industry supported Lundstrom’s bill, while Gov. Bill Richardson , Lt. Gov. Diane Denish and Attorney General Patricia Madrid pushed for interest-rate caps on payday loans.

Brian Condit, Richardson’s deputy chief of staff, said the governor plans to put the payday-loan issue on legislators’ agenda when they convene a 30-day session Jan. 17. But parties appear to be no closer to agreement on the matter.

Madrid has proposed rules capping annual interest rates on payday loans at 54 percent, while a governor-appointed task force is working on recommendations that likely will include limiting the number of times a borrower may renew a loan.

How can one industry be singled out when it comes to profitability? I know from the years that I worked in retail that it is not uncommon for the price of clothing to be marked up at least 100 percent when it first hits the stores. This article has jewelery markups at 250 percent. Does that mean there should be a governor-appointed task force recommending a limit on the amount of bling an individual can purchase? How about those two cookies you just bought for $2.50 at the mall? How much do you think they were marked up?

The above profits are on goods sold, not on a risk taken by loaning money, and make no mistake there is a risk. If there wasn’t, the borrowers could walk into a bank and get a loan at a much lower cost. Legislators and the Governor need to leave this issue alone.

You know, with OVER ONE BILLION DOLLARS IN EXTRA TAXPAYER MONEY flowing into state coffers, it might be wiser to spend the 30 days focused on how to manage that money. After all, that is the constitutional purpose of this session.