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Submitted by Annissa Flores/Isleta Tribe Member and US Army Veteran

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As our nation celebrated Veterans Day and honored those who answered the call to service, federal law was passed that would extend to all veterans and consumers the financial regulations that prevent current-duty military members and their families from getting the credit they need . New Mexicans should be doubly concerned as a similar proposal that would limit access to consumer credit was being considered here at the state level. As the economic fallout from the COVID crisis continues to rage and inflation hits 30-year highs, our elected officials must oppose any legislation that would aggravate the situation for military and civilian families alike.

For many members of the military, financial worries often burden them more than their assignments. These financial challenges persist after the transition to civilian life due to too many veterans Report fault Pay bills. Despite good intentions, policy efforts have not mitigated these challenges — and in some cases have exacerbated them. Such is the case with the Military Lending Act’s (MLA) 36 percent interest rate cap on most forms of consumer loans and credit.

Proponents claimed the MLA would help military members stay out of debt — but it didn’t. As a matter of fact, twice as many soldiers are concerned about paying their debt today compared to before the MLA was passed.

The National Foundation for Credit Counseling publishes a study Earlier this year, it found that active duty members were more than twice as likely to take out a cash advance or payday loan in 2020 than they were in 2019. Service members said they took out these loans because only Few other options were available. This is notably more than a decade after the MLA was signed.

To make matters worse, just as HR 5974 (the bill to extend the MLA’s interest rate cap) was being introduced in Congress, the Consumer Financial Protection Bureau (CFPB) announced legal action against predatory lenders in Texas who charge very high rates on payday Interest rates imposed loans to active duty military personnel and their families. This is despite the fact that the MLA prohibits offering such high rates to active service members. The agency had already published a report in 2020 shows that a “considerable proportion of young servicewomen and men are in arrears with debt payments or have serious deviations (e.g.

The mounting evidence is clear. Interest rate caps on consumer credit aren’t working for military members and their families, especially at a time when the cost of basic commodities — food, gas, clothing — is rising due to inflation and economic uncertainty from the pandemic continues to loom.

Here in NM, lawmakers are once again debating a flawed proposal for a 36 percent interest rate cap on most consumer loans introduced last year. That bill is not needed here, as previous legislative action in Santa Fe has successfully driven most forms of predatory lenders out of state, if not out of business. The remaining small-dollar lenders are highly regulated at the state and federal levels, and fill a niche that New Mexico banks and credit unions don’t fill: They meet the needs of customers who don’t have the savings or credit history but need short-term credit. Term loan to meet urgent needs like car repairs before the next paycheck.

As the Greater Albuquerque African American Chamber of Commerce Recently, it was found that legitimate small-dollar lenders in New Mexico have demonstrated that they cannot lend at 36 percent less than $2,500, an amount most people simply do not need, and risk a policy front of consumers Protecting cycles of debt adds more debt to your bottom line. That just doesn’t make sense.

This problem is much more complicated and requires a longer look. Before proceeding with legislation, the issue should be further explored to find a better way to lower interest rates and improve consumer protections in a way that both protects consumers and ensures they have access to what they need keep credit. Here in New Mexico, additional forms of consumer protection may be needed for small loans. But we can and must do better than the MLA given the unfortunate unintended consequences it brings to service members. We cannot afford to force policies on veterans, their families and everyone else in our state that don’t seem to work anywhere.