The Southwest Public Policy Institute’s explosive report, Black Market Payday, is continuing to make waves, garnering coverage across both local and national news outlets.
In the wake of our investigation, the New Mexico Sun published two separate stories spotlighting the dangerous consequences of the state’s 36% APR cap, which has effectively driven borrowers into the shadows of the financial system. The first article, titled “Southwest Public Policy Institute links 36% APR cap to illicit emergency credit,” details how former State Rep. Tara Jaramillo, through her company Positive Outcomes, allegedly charged her low-income and Native American employees illegally high interest rates on payday-style loans, in some cases up to 2,700% APR.
The second piece, “Lack of legal credit options drives rise in illicit payday advances,” links New Mexico’s credit access crisis to similar outcomes in other states like Illinois. Citing academic research presented to the U.S. Senate Banking Committee, the article highlights how price controls don’t make loans cheaper—they make them vanish. And when legal credit disappears, black markets rush in to fill the void.
Meanwhile, RedState took the story national, with a sharp exposé headlined “Progressive Payday? New Mexico Democrat Probed for High-Interest Loans to Workers.” The report explores the disturbing irony: while New Mexico Democrats like Jaramillo were loudly supporting a crackdown on so-called “predatory lending,” she was allegedly running a payday lending operation of her own; one that skirted the law and preyed upon some of the most financially vulnerable people in the state.
Even more concerning, the Department of Workforce Solutions investigation into these practices appears to have been delayed or slow-walked, raising questions about the role Governor Michelle Lujan Grisham’s administration may have played in shielding one of their own.
Our report, Black Market Payday, along with our earlier consumer simulation studies No Loan For You! and No Loan For You, Too!, continues to make the case that well-intentioned rate caps have unintended consequences. When lawmakers eliminate legal credit, they don’t eliminate the need for credit, they simply push desperate borrowers underground, where regulation and transparency are nowhere to be found.
Stay tuned as the fallout continues. And if you haven’t read Black Market Payday yet, it makes some some exciting reading.