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Payday loans targeted by ERLC, others in coalition

WASHINGTON (BP) — The Southern Baptist Ethics & Religious Liberty Commission has helped launch a religious coalition seeking an end to the predatory loan industry.

The ERLC joined with other religious organizations Thursday (May 14) to announce the Faith for Just Lending Coalition at a Capitol Hill news conference. The diverse alliance that includes Baptists, other evangelical Christians and mainline Protestants seeks to raise awareness about predatory lending and to motivate individuals, lenders, churches and the government to help bring an end to the practice.

Commonly referred to as payday lending, the growing practice often draws poor people especially into a debt trap by charging excessive, and often misleading, interest rates, according to coalition members. While an interest rate may be presented by a lender as 15 percent, for instance, it actually is only for the two-week period until a person’s next payday. The annual interest rate may be 400 percent or more, making it difficult for the borrower to repay the loan. It requires years for some people to pay off their debt.

More than 20,000 payday and car-title loan stores exist in the United States, according to the coalition. Payday lenders also operate online in a country that has a variety of state and local laws regarding the practice.

Coalition members decried the predatory practices of payday loans in introducing their effort.

Predatory payday lending “grinds the faces of the poor into the ground,” ERLC President Russell Moore said in a written statement announcing the coalition’s formation. “As Christians, we are called by Jesus, by the prophets and by the apostles to care for the poor, individually, and also about the way social and political and corporate structures contribute to the misery of the impoverished.”

Barrett Duke, the ERLC’s vice president for public policy, said at the May 14 news conference, “God is not an economic Darwinist. He does not believe in survival of the fittest when it comes to the treatment of the poor.

“The Bible speaks clearly about appropriate ethical behavior in business,” he said. “[God] didn’t oppose financial transactions, but He did, and He does, oppose predatory activities that take advantage of someone, especially the poor.”

Messengers to the 2014 SBC meeting approved a resolution that denounced predatory payday lending and called on the adoption of government policies to end the practice.

Other members of the Faith for Just Lending Coalition, as announced, are the National Association of Evangelicals; Cooperative Baptist Fellowship; National Baptist Convention, USA; National Latino Evangelical Coalition; Center for Public Justice; PICO National Network; and Ecumenical Poverty Initiative.

While Moore acknowledged the organizations don’t agree on every policy issue, he is “happy to work together on this issue to stand against unchecked usury and to work for economic justice, human dignity and family stability.”

At its launch, the coalition announced the following principles for just loans:

— “Individuals should manage their resources responsibly and conduct their affairs ethically, saving for emergencies, and being willing to provide support to others in need.

— “Churches should teach and model responsible stewardship, offering help to neighbors in times of crisis.

— “Lenders should extend loans at reasonable interest rates based on ability to repay within the original loan period, taking into account the borrower’s income and expenses.

— “Government should prohibit usury and predatory or deceptive lending practices.”

The SBC resolution expanded on numerous concerns about payday lending, describing it as “the practice of lending small amounts of money, usually $350 or less, to individuals for two-week periods (i.e. until the next payday) potentially trapping borrowers in an endless cycle of two-week loans, often at an annual interest rate up to or exceeding 360 percent.”

From a biblical standpoint, the SBC resolution notes, “All such predatory behavior conflicts with God’s plan for human relationships (Exodus 22:25–27; Leviticus 19:35–36; 25:35–37; Nehemiah 5:1–13; Proverbs 11:1)” and it “fails to respect the dignity of the person created in the image of God and interferes with human flourishing.”

At the May 14 news conference, organizational representatives from Alabama and Kansas explained the problems in their states.

Joe Godfrey, executive director of the Alabama Citizens Action Program (ALCAP), said his state permits payday lenders to charge an annual interest rate of more than 450 percent and has more title-lending outlets than any other state. A committee in the Alabama House of Representatives recently failed to forward legislation that would have limited interest rates to 36 percent, he said.

Calling for a federal law to stop predatory lending, Godfrey told the story of a Birmingham woman who took out nine loans at nine different sites in a day. When she could not pay off the loans at the end of the month, she borrowed more money or rolled the loans over, he said. “They become your owner, and you become their slave,” Godfrey quoted the woman as saying

ALCAP is an auxiliary of the Alabama Baptist Convention.

Claudette Humphrey told the news conference audience the loan effort she directs for Catholic Charities in Salina, Kan., still is not enough to help some people escape predatory debt.

“We live in a time where it is a rarity to find a truly bipartisan issue, an issue where people of various religious beliefs can agree, an issue that crosses gender and color lines,” said Humphrey, director of the Kansas Loan Pool Project. “Predatory lending is that issue. Why? Because you are either for charging triple-digit interest rates … or you are against it. You are on the side of being morally right or you are on the side of being morally wrong.”

Dallas pastor George Mason, representing the Cooperative Baptist Fellowship, told news conference attendees it is time for a national remedy for “predatory wolves.”

“We are here to say that this is no longer a local matter,” he said. “We all work locally. We’ve got all sorts of ordinances in our cities, and we’ve replicated those throughout Texas and around the country. At state levels, we’ve been working and been thwarted again and again. This is a national scourge upon our land, and it has to end.”

With the coalition now launched, its members will begin focusing on building support throughout the country and in Congress to put an end to the predatory practices of payday lending, Duke said. Coalition members visited with congressional members or staff after the May 14 news conference.

Since payday lenders often “refuse to operate in a responsible manner, government intervention is crucial,” Duke said in a written statement for the coalition. “We cannot sit by idly while some of the poorest among us are preyed on by people simply looking for a quick buck with no regard for the devastation they cause in the lives of others.”