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Rules for predatory lenders must reflect letter, spirit of law

An elderly woman got a small loan from a storefront lender and couldn’t understand why she could never manage to pay off the loan even though she made payments.

Leonard Gorman, executive director of the Navajo Nation Human Rights Commission, explained the basics of principal and interest and renewal language in the loan agreement. Once she understood, she cried inconsolably.

Last year, when the Legislature finally reformed laws governing storefront lenders – also called predatory lenders or payday lenders – there was a sense of accomplishment that they had dispatched a nagging problem after years of complaints.

A recent hearing in Gallup made it clear there’s still work to do. Gorman blamed the lenders’ deliberately confusing communications for financial burdens on Navajos, but the small lenders trap Indian and non-Indian people alike.

This is one reason New Mexico is poor. Thousands of people can’t get out from under these debts with their spiraling interest rates, so they don’t participate fully in the economy.