Local payday loan firms and their customers have been waiting longer than usual for their day in court lately. According to Cynthia Sanders, chief clerk of the McKinley County (N.M.) Magistrate Court, two judges have recused themselves from all cases involving the payday loan business for the past three weeks.

While it's not unheard of for judges to recuse themselves from an entire category of cases, said Karen Janes, director of the Magistrate Court Division of the state's Administrative Office of the Courts, it is an unusual development.

"This is the first time I've seen it," said Sanders, a 25-year veteran of the court.

The McKinley County Magistrate Court deals with dozens of instant payday loan firms seeking to garnish the salaries of delinquent customers every week. When judges recuse themselves, it falls on the county's district court to find judges in other counties to hear the case. If things go smoothly, the search shouldn't last more than a few weeks. If not, however, it can take months.

Judge John Carey declined to comment on the reasons for his recusals. Judge George Galanis summed up his decision in one word.

"Unconscionable is the key word here," he said, referring to his take on the terms most lenders demand for payday loans.

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It's no secret that New Mexico Governor Bill Richardson isn't a big fan of payday loans. Following months of industry criticism, Richardson and Attorney General Patricia Madrid announced regulations yesterday, all meant to curtail predatory payday advance lending in the state.

The regulations, which target payday loan lenders almost entirely, would go into effect July 16 - after a public comment period in June.

Among the main features of the regulations are fee cap of $15.50 per $100 borrowed and limits on the total amount borrowed on a payday loan online to 25 percent of the borrower's gross income.

We have to do this," Richardson said during a news conference in Albuquerque today. "We have to stop abusive practices against consumers."

The regulations would:

• Set a flat fee for new payday loans and renewals at $15.50 per $100.
• Give consumers the sole discretion of renewing a cash loan two times at a maximum fee of $15.50 per $100.
• Cap the amount of borrowed money at 25 percent of the consumer's gross income.
• Give consumers the chance to enter into a longer-term payment plan - up to 130 days - with no additional fees after a second payday loan renewal.

"In the past," Madrid said, "people had only two weeks to pay. We are going to lengthen the time. They all want to pay. Now, we are going to make that possible."

Madrid has attempted to get legislation regulating payday loans passed since she became attorney general in 1999, to no avail.These regulations, she said, do not require legislative approval.

Did the payday loan industry pay for another trip for New Mexico Governor Bill Richardson that the media hasn't reported yet?

That's the assertion of yesterday's online edition of the New Mexican. According to the most recent Democratic Governors Association contribution / expenditure report, the nation's largest payday loan company made a travel contribution valued at $2,352 on February 5.

The day after Advance America paid the sum, Richardson — the chairman of the DGA — gave the keynote address at the Emergency Issues Conference at North Carolina State University in Raleigh, N.C. From there, Richardson traveled to Washington for a news conference with Michigan Gov. Jennifer Granholm to discuss the effects of President Bush's budget proposals on their respective states.

At the time, Richardson's office said the DGA was paying for Richardson's trip. Yet the DGA's report, which is filed with the IRS, didn't list any other travel expenses or contributions for those days. Three weeks prior, the Albuquerque Journal reported that Advance America made at least six travel contributions to the DGA within the last year, for almost $17,000.

For what it's worth, some of previous contribution dates coincide with Richardson travel. In early February, the State Legislature was debating a bill that some critics — including consumer advocate and Attorney General Patricia Madrid — criticized as being too friendly to the companies that offer instant payday loans. The bill died on the Senate floor as the result of a threatened filibuster.

Advance America, which operates at least 10 cash loan offices in New Mexico, gave another $10,000 to the Democratic Governors Association on February 24, bringing its total for the year so far to $12,352. It remains to be seen whether there was any impropriety on Richardson's part, but these developments in the New Mexico payday loan industry are certainly worth following.

Gov. Bill Richardson isn't pleased. He says his administration will tackle what the Legislature declined to do during its just completed session: regulate payday lending.

Richardson has directed the state Regulation and Licensing Department to issue rules that will do much of what had been proposed in a bill that died when the legislature adjourned last week.

The regulations will establish caps on fees as well as limit the number of cash loan renewals and rollovers of payday loans.

In addition, The Albuqerue Tribune reported that the administration is imposing a moratorium on new licenses for payday lenders.

Critics contend payday lenders target the poor and that consumers can become trapped with debts because of the high-cost loans. The governor's regulatory attempt is separate from proposed rules developed by Attorney General Patricia Madrid to cap interest rates on payday loans and impose other restrictions on lending practices. However, lenders have filed lawsuits challenging the regulations by the attorney general.

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A bill to impose new consumer protection rules on the New Mexico payday loan industry is marching through that state's legislature. It passed the House, 63-4, with its next stop the Senate Judiciary Committee. But it's not quite the bill it was when it first showed up in Santa Fe, writes the Gallup (N.M) Independent.

Rep. Patricia Lundstrom, a Democrat from Gallup, introduced the bill and is fine with the changes that have been made to it. But payday lobbyists and owners resent that they're being singled out at all, and staunch consumer advocates think the changes have weakened it.

New Mexico has been wrestling with regulating the payday advance industry, which offers cash loans against a customer's paycheck(s), for some time. Lundstrom's bill proposed a cap on how much a person could borrow — at either $1,000, or 25 percent of his/her monthly income, whichever was less. It also proposed limiting interest rates to 92 percent annually.

The bill was doing fine until the House Judiciary Committee voted it down, and approved a substitute that raised the cap on a loan to $1,500 or 30 percent of a customer's gross monthly income. Lundstrom, along with the religious groups and the AARP, had no problems with the changes. So where does the problem stem from?

Last year, the state assigned a task force to come up with a list of regulations that actually had a chance of passing in 2006. Among the key points that lawmakers cannot reach a consensus on is how to cap payday loans, and at what amount. Most of the task force agreed on $1,000, but industry representatives — determined not to be muscled out of business — have been angling for at least $1,500 from the start.

"Why should payday loans be targeted and restricted?" Stephen Solomon, an attorney for one cash loan franchise, asked. "Our product lets our clients keep their lights on, their homes warm. If there wasn't a need, there wouldn't be so many stores. Consumers speak with their feet."

The industry's critics, meanwhile, want to make sure that reasonable terms are in place, and some consumer advocates think the legislation is not going far enough. For example, the director of the New Mexico Public Interest Research Group, Jeanne Basset, thinks Lundstrom's bill does not do the job.

"The bill will not stop the debt treadmill, and that is our main concern," she said. "It's great they're trying to do this, but let's do it in a way we know helps (borrowers) get out of the debt trap."

Basset would prefer a maximum APR of 54 and an extension of the 14-day period customers have to repay their loans — which she says results in cycles of debt that often take months, even years to get out of. The current bill does not mandate a longer repayment period or even guarantee 14 days.

Does this payday loan bill go far enough to protect consumers, and should it even be moving through the legislature at all? Regardless of whether it is eventually signed into New Mexico law, these questions will be debated for a long time as people on both extremes (and everywhere in between) jockey for position.

Isabell Trujillo told New Mexico lawmakers that she took out a payday loan when she needed additional money to pay medical bills, then requested another when she couldn't pay off the sum. And so on. Twelve payday loans later, she owes $1,200 every two weeks in interest alone.

The Alamogordo News reports that the New Mexico Senate Corporations and Transportation Committee heard testimony on four bills last week, each designed to regulate payday loan businesses. The Committee Chairperson, Democrat Shannon Robinson of Albuquerque, said they would work to combine them into a single bill.

Advocates of the payday cash loan legislation say Trujillo's experiences are all too familiar, and that a 14-day loan term sets people up to fail. But Margaret Coyazo-Hernandez, owners of Fast Bucks in Alamogordo, calls the criticism unfair. She counsels borrowers on the dangers of short-term loans, and often advises them to seek other options.

Coyazo-Hernandez said many of her customers have already gone to more traditional lenders — and been denied.

"A lot of these people have already burned their bridges, and they come to me. We tell them, these loans are for short-term needs," she said.

According to Steve Solomon, V.P. of Fast Bucks, people use the cash advance loans for emergencies such as paying their utilities, avoiding late fees or bounced checks, etc.

"Tens of thousands of New Mexicans are asking the Legislature to keep these businesses going," Solomon said. "They vote with their feet every day."

State payday loan operators say they don't oppose regulation, but insist they would be put out of business if the legislation sponsored by Sen. Bernadette Sanchez, an Albuquerque Democrat, is passed. Three other state senators have also sponsored bills, but Sanchez's is the most drastic.

It would extend the length of the loan to 120 days, while others would lengthen it 90 days. Another idea is to limit borrowers to two rollovers and provide options for those unable to pay. The legislation also puts limits on interest rates and restricts the number of loans per person.

Joel Cruz Esparza, head of the Consumer Protection Division of the Attorney General's office, said that payday loan companies are exaggerating when they say the legislation will put them out of business.

"The intent of the legislation proposed by the attorney general is not to eliminate the industry. The intent is to change the product," he said.

Esparza said agencies could continue to offer online payday loans and keep their stores open, but with more consumer-friendly installment loans. This battle between New Mexico legislators and loan providers is similar to many throughout the country, notably a Central Illinois payday loan clash. Will the products offered by cash advance companies be dramatically altered? Only time will tell.

Clovis, NM — The New Mexico attorney general's office is concerned about the lending practices of payday loan companies and is proposing stricter regulations.

The office hosted a meeting on Wednesday at the Clovis-Carver Public Library to discuss proposed regulations. These regulations included eliminating 14 or 30 day loans and a cap on interest (set to 54%) and services.

Albuquerque, New Mexico — Attorney General Patricia Madrid, following a legislative failure, wants to cap payday loan rates in New Mexico using her rule-making authority.

After a series of hearings, Madrid said she wanted to set a 54 percent limit on payday loans and borrowers would have at least four months to pay back to the loan. Current payday loans generally charge rates in the hundreds of percent and have a payback term of 14 to 30 days.

Madrid conceded her latest effort to regulate the online payday loan industry faces a likely legal challenge. But she also said legislative allies already are at work on cap proposals for the next state legislative session, starting in January.