Payday loan limits urged by religious coalition
Tom Strode, Baptist Press
April 15, 2016

Payday loan limits urged by religious coalition

Payday loan limits urged by religious coalition
Tom Strode, Baptist Press
April 15, 2016

American Christians overwhelmingly support government regulation of the predatory lending industry, Southern Baptists and other religious leaders in a Faith for Just Lending Coalition said April 13.

Coalition members, in a telephone news conference, pointed to online survey results by LifeWay Research that 86 percent of self-identified Christians in 30 states believe laws and regulations should bar loans at “excessive interest rates.”

Payday lending, as it is commonly known, often draws poor people into a debt trap by charging exorbitant, and often misleading, interest rates. Though an interest rate may be portrayed by a lender as 15 percent, for instance, it actually is only for a two-week period until a person’s next payday. The annual interest rate typically is about 400 percent, making it extremely difficult for a borrower to repay the loan.

“[W]e need measures that rein in exorbitant interest rates” and “not half-measures” that are sometimes passed, Southern Baptist public policy specialist Barrett Duke said during the teleconference call. “The biggest challenge … is getting public decision-makers to enact these particular regulations.”

Americans would benefit from the federal government’s annual percentage rate (APR) cap of 36 percent for military members, Duke told reporters.

“If it’s good enough for the military, that interest rate cap should be good enough for everyone,” said Duke, vice president for public policy of the Ethics & Religious Liberty Commission (ERLC). The states that have caps demonstrate that lenders can still make “reasonable profits” without taking advantage of borrowers, he said.

The coalition-sponsored survey of 1,000 self-identified Christians by LifeWay Research of the Southern Baptist Convention included these results in its April 13 release:

  • 77 percent said it is a sin to extend a loan that does financial harm to the borrower.

  • 55 percent said the “maximum reasonable” APR for loans should be 18 percent or less.

  • 56 percent said their church should offer advice to the financially needy, and 27 percent would like their church to provide loans or gifts to individuals in financial trouble.

The Faith for Just Lending Coalition also released April 13 its findings in a survey of clergy and religious service providers who know people who have borrowed payday or car title loans. The study showed:

  • 86 percent pointed to a negative effect on payday loan borrowers.

  • 35 percent had helped a borrower pay off or refinance a payday or car title loan.

Predatory lending is a pastoral and public issue, said Stephen Reeves, associate coordinator for partnerships and advocacy of the Cooperative Baptist Fellowship (CBF).

“Churches are, and need to continue, teaching stewardship as well as generosity …,” Reeves said. “To the public decision-makers, we want to show you that Christians widely agree that the laws and regulations should protect against expensive interest and loans that cannot be repaid.”

Efforts to convince the Texas legislature to regulate predatory lending have failed, resulting in a different strategy in that state, said Michael Mulvey, bishop of the Roman Catholic Diocese of Corpus Christi. The Catholic bishops switched their appeals to local governments, and 35 cities have passed ordinances regulating predatory lending, he told reporters.

Mulvey demonstrated the magnitude of the problem in Corpus Christi by citing the $29 million in fees payday lenders in the area garnered in 2014.

Coalition members told reporters they are not opposed to lending but to predatory lending.

“What we object to is predatory lending that takes advantage of vulnerable people, traps them in debts that they can’t afford and can’t escape, and drains their already limited resources with usurious interest rates and fees,” said Galen Carey, vice president of government relations for the National Association of Evangelicals (NAE).

“Predatory lending violates basic biblical and moral principles,” he said, “and it hurts people in our churches and communities.”

The LifeWay survey found a disproportionate number of African Americans – 49 percent – say they have taken out a payday loan.

“[P]redatory lenders really target communities of color,” said Cassandra Gould, pastor of an African American church in Jefferson City, Mo., and executive director of Missouri Faith Voices. Payday lending is a “scourge on our communities,” she said.

About 20,000 payday and car-title loan stores exist in the United States, according to the coalition. Payday lenders also operate online.

The ERLC helped launch the Faith for Just Lending Coalition in May 2015 as a concerted effort by diverse religious organizations to increase awareness of predatory lending and to motivate individuals, lenders, churches and the government to help bring an end to the practice.

Southern Baptists addressed the predatory loan industry in a resolution adopted by messengers during their 2014 annual meeting. The resolution denounced predatory payday lending, called for the adoption of just government policies to end the practice and urged churches to provide training in financial stewardship.

In addition to the ERLC, NAE and CBF, members of the coalition’s steering committee are the Center for Public Justice; Ecumenical Poverty Initiative; National Baptist Convention, USA; National Latino Evangelical Coalition; the PICO National Network; and the U.S. Conference of Catholic Bishops.

(EDITOR’S NOTE – Tom Strode is the Washington bureau chief for Baptist Press, news service of the Southern Baptist Convention.)

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Survey: Christians call ‘payday loans’ sinful