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F I S C A L I M P A C T R E P O R T

SPONSOR Lundstrum

DATE TYPED 03/16/05 HB HJM100/aHJC

SHORT TITLE Consumer Lending Practices Study

SB

ANALYST McSherry

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Minimal-$37.0) Non-Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

House Joint Memorial relates to SB 787, Consumer Loan Act, and to SB 200 Consumer Loan

Act.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Regulations and Licensing Department (RLD)

SUMMARY

Synopsis of House Judiciary Committee Amendment

The House Judiciary amendment changes the proposed date that the office of the attorney gen-

eral and the financial institutions division of the regulation and licensing department would be

proposed to make available copies of the proposed joint study of consumer lending practices,

including recommendations from August 31, 2006 to December 15, 2005.

Synopsis of Original Bill

House Joint Memorial 100 proposes that the Attorney General Office (AGO)and the Financial

Institutions Division (FID) of the Regulation and Licensing Department (RLD) be requested to

undertake a joint study of consumer lending practices in New Mexico and make available copies

of the study, including legislative action recommendations, to the “appropriate interim legislative

committees” by August 31, 2006.

The proposed study would focus on:

1.

the data collected by RLD regarding payday loans, car title loans, and tax refund an-

ticipation loans

2.

the regulatory framework of making closed-end, and short-term loans of $1,000.00 or

less regarding payday loans, car title loans, and tax refund anticipation loans

House Joint Memorial 100 -- Page 2

3.

the implementation of a statewide lender’s information exchange program.

Significant Issues

The proposed scope, timeline and purpose of the proposed study are clearly defined in the me-

morial.

PERFORMANCE IMPLICATIONS

RLD asserts that the present Financial Institutions Division staff is at the limit of its performance

capacity and that additional resources would be required to adequately perform and manage the

proposed study. However, other department and divisions often perform studies as requested by

the legislature. The depth and breadth of the study would be affected by whether or not the study

was funded.

FISCAL IMPLICATIONS

There is no appropriation contained in this memorial.

Many studies are proposed and requested to be performed by agencies without associated fund-

ing.

RLD contends that conducting the proposed study would result in increased cost to the Division

and that either the Division: 1) would need additional temporary help who understands the busi-

ness of making short-term loans such as payday, car title, and tax refund anticipation loans or 2)

would need to contract with an outside professional to research, assemble and analyze data to

complete the study. The Department asserts that the anticipated the cost of either option is ap-

proximately $39,000, considering salary, office space, per diem and use of a vehicle.

ADMINISTRATIVE IMPLICATIONS

RLD reports that the Department anticipates the study would take a significant amount of the

Division Director’s and one additional staff member’s time. The Department predicts that the

Director would need to convene periodic meetings of a group consisting of small loan licensees,

trade associations, consumer advocates, and the Attorney General’s Office and that the members

of the group would need to come to a consensus on recommendations for any appropriate legisla-

tive action. According to RLD, a previous study on this subject was conducted in 1999 and the

Department estimates that FID management spent the equivalent of 0.3 FTE percent of their time

on the project.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

If HJM100 is not enacted, it is likely that a joint study performed by the Office of the Attorney

General and the Financial Institutions Division of the Regulation and Licensing Department

would not be completed regarding consumer-lending practices in New Mexico.

EM/lg