Tuesday, March 11, 2008

Usury


Christians Heart Payday Lenders by Stephanie Mencimer

The Christian Right has used the Bible to bolster many a political issue, from abortion to stem cell research. Strangely enough, however, they seem to have missed one of the biggies: the Bible's many injunctions against usury, or predatory lending to poor people. The Bible is far more explicit in its disapproval of usury than, say, gay marriage. (The book of Ezekiel compares usurious lending to extortion and murder for hire, in fact, and threatens major hellfire for those who practice it.) Yet in parts of the country where the Christian Right wields the most political power, usurious payday lending has flourished more than anywhere else in the U.S., according to a new study by Christopher Peterson and Steven Graves.

Today's payday lenders charge around 450 percent interest on short-term loans, rates ten times higher than the federal definition of criminal loan sharking and nearly double what the Mob charged in its heyday. Peterson's home state of heavily Mormon Utah ranked high on the list of havens for payday lenders. The state claims more payday lending outlets than McDonalds, Burger Kings, Subway sandwich chains, and 7-11s combined, and has failed to pass even modest restrictions on allowable interest rates that exceed 500 percent a year, among the highest in the nation. (One reason may be that the chairman of the Salt Lake City Republican Party, former State Senator James Evans, himself owns several payday-lending outfits.)

Peterson and Graves decline to speculate as to why devout Christians and Mormons who wield considerable political clout continue to tolerate practices that are so clearly at odds with Biblical teachings. They simply attempted to point out the correlation, writing that sadly, "Those states that have most ardently held to their pious Christian traditions have tended to become more infested with the progeny of money changers once expelled by Christ from the Hebrew temple."

Funny how we use the bible to justify our prejudices (gays) or end times foreign policy but conveniently forget the part about usury. Religious people (including our President) have used religious imagery (Crusade) and have advanced a war that by it's very existence is violating at least four of the Ten Commandments (coveting anything of your neighbors'[oil], killing, stealing, working on the Sabbath). Makes one question whether a lot of people's piety is really about God.

"If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury." -- the Bible

8 comments:

Eric said...

great post.

wunelle said...

It is a great post.

I've always thought the social conservative philosophy is a mixture of some degree of belief in one or another mythology with political savvy of how to use these beliefs for some social advantage--to include acquisition / retention of power and influence. And the mythologies themselves have evolved to facilitate this.

I'd never thought about usury, but it's no surprise to me to find the prevalent behaviors of xian societies are overtly at odds with the myth's dicta.

dbackdad said...

Thanks.

One of my wife's brothers owns a small chain of check-cashing places in Iowa. Ostensibly her family is Catholic ... though of the cafeteria variety. Even disregarding the biblical aspect of usury, I think payday loan type places are despicable. But owing to my desire to not create a family rift, I've never brought up this discussion with him. He's a nice guy and hard-working. I don't think he started this type of business because he wanted to prey on poor people. He would have just as quickly opened a series of convenience stores if he felt they would have been successful in small-town Iowa.

All that being said, religious or not, there should not be a disconnect between what we do to make money in life and how that profession positively or negatively affects the world around us. It's not the evil people that are the problem in the world - it's the apathetic people who, through their ambivalence, let evil be done.

Laura said...

There's a really good book I just read, called "Short Changed" and it looks at what the author terms the "fringe" economy. It's an interesting book because he doesn't universally deride payday lenders and other forms of subprime lending. They're actually the only form of financing available to various groups of people and can be helpful if used properly.

Rather he decries the practices of the companies themselves - charging obscene interest and allowing customers to keep rolling over their loans without a way out.

It is interesting though, that a larger number of Christians are jumping off the Rightwing bandwagon and are adopting a more Social Justices stance. Hopefully they start becoming more vocal about their socially conservative, single-issue christians.

Laura said...

I meant to include a link to an article about the "post religious right" movement.

Scott said...

I have to disagree strongly with the characterization of payday loan shops as predatory or immoral. As a person who has been living paycheck to paycheck since starting off at 19 with two kids and the sole income earner I have, from time to time, used these places to actually save quite a bit of money.

For instance our bank will charge 35 bucks per item on a checking account over draft, even if you only go negative 40 bucks total if there are say 5 small items on your debit card that's a total fee of $175 bucks. Even if you get the money in your account the next day they still charge the fee, which can prove to be an interest rate in the thousands.

Enter a quick 100 cash advance which typically charges around 10% of your balance per week (so 100 dollar loan would be 10 bucks a week to carry) and you can see how depositing that cash to cover the checking account overdraft and paying off the loan quickly can save a coupla hundred bucks.

dbackdad said...

Scott and Laura - I may not have been clear with my objections. The concept of payday advances is useful for a segment of society, but in a proper world, it wouldn't be. And by no means am I defending bank overdraft policies. They are a racket that has angered me so in the past that I've changed which institutions that I've banked with.

My problem with check-cashing places is in the execution of the concept, not the theory. Many borrowers are not made aware of the effective interest rates they are being charged (%500+ in many states). Payday loan places are primarily in low-income neighborhoods and over half of borrowers make under $10,000. Over half of borrowers are minorities. Loans are allowed to be rolled over. Most borrowers are repeat borrowers (10+ a year).

Loan sharks are useful too ... that doesn't make them right. Believe me, I grew up in the "fringe" economy and my brother still inhabits it. A society that values consumption over conservation and spending over saving is pushing us all into the fringe. There is no middle any more.

In an election year, people will get their "economic stimulus" checks and will be as happy as pigs in shit and will blow the money immediately. Meanwhile, they'll temporarily forget that they are paying three times as much for gas, stupid amounts for healthcare, and that the dollars they do have don't buy anything. To quote Einstein, "Two things are infinite: the universe and human stupidity; and I'm not sure about the universe."

Kvatch said...

...charging obscene interest and allowing customers to keep rolling over their loans without a way out.

Sounds like your average credit-card. "God Bless the 'Debtor Industrial Complex'!"