Usury and Christian power
MotherJones Blog skewered Christians yesterday for obsessing over abortion and stem cell research while missing “one of the biggies” – the Biblical command to protect the poor by condemning usury. “In parts of the country where the Christian Right wields the most political power,” Mother Jones claims, “usurious payday lending has flourished more than anywhere else in the U.S.”
The sad thing is, it’s true. A recent study by Christopher Peterson and Steven Graves looked at the concentration of payday lenders by state and measured Christian political power in each state. They found a stronger correlation between usury and Christian power than usury and race or usury and poverty. In fact, they state, “We can be 99% sure that about 56% of the time when the Christian Power goes up, then payday lending per capita also rises.”
Payday lenders give short-term cash advances and then charge 400-500% interest rates. According to the Center for Responsible Lending, people who fall in the trap typically pay $793 for a $325 loan. Payday lenders cost American families $4.2 billion in excess fees each year.
Graves and Peterson shied away from explaining the correlation, but in an interview with Newsweek, Peterson suggested that Christians abandoned some of their compassion for the poor when they linked forces with big-business conservatives: “Once that happened, around the country a lot of states started to deregulate, started to less aggressively prevent usurious loans.”
That’s the bad news. The good news is that Christians already have the political clout to make a difference in states where usury runs rampant. Jim White, editor of the Religious Herald has urged Christians to support anti-usury legislation. In 2007, the Baptist General Association of Virginia passed a resolution against payday lenders. Robert Parham, executive director of the Baptist Center of Ethics, applauds these efforts and urges Christians to embrace their moral obligation “to protect the poor and marginalized.”




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back to top38 Comments to “Usury and Christian power”
Many abortionists have a hard time justifying abortion in their own hearts and Christians vocally disagree with them.
That means Christians are “obsessing over abortion.”
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Given I’m not a Christian, as a free-market capitalist libertarian, I really have no problem with charging interest on loans (I don’t approve of predatory loans, but don’t want government protecting individuals, but individuals protecting themselves).
However, the Bible forbids usury — that is the charging of ANY interest on loans — as clearly as it does homosexuality. And at one time in Christendom, usury — that is the charging of ANY interest — was against the civil law as it currently is in the Islamic world (they outlaw usury because the Bible forbids it and Muslims follow the Bible as well as their Koran which is an additional holy book just like the Mormons have both the Bible + an additional book).
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Well I don’t like usury and I don’t like abortion.
But, everything else being equal, for some reason I would rather be charged interest on my home loan than to be yanked full-term out of my mothers womb and jabbed in the brain with an instrument wielded by a ‘doctor’, then hacked into pieces and discarded in a garbage can.
Sort of judgemental of me, I guess, but I therefore find myself getting a little bit more exercised about abortion than I do about usury.
Being lectured by Motherjonesblog about my Christianity is sort of hilarious anyway.
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The concentrations of payday lender locations are correlated with something as subjective as “rating of Christian political power within a state” to somehow make a putatively defintive and unassailably empirical case that Christians are hypocrites who swallow camels while straining gnats.
When good social scientists go bad.
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Mother Jones is obviously using the study as a way to taunt Christians as hypocrites. It may be a little uncomfortable to have MoJoBlog lecture us, but the blog and the study seem to be making a valid point – however crudely the blog phrases it.
Being pro-life and anti-usury aren’t mutually exclusive, of course, and we don’t have to focus on one to the exclusion of the other. I still think it’s sometimes valuable to have non-Christians challenge us to develop a more consistent ethic.
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Why don’t we get back to the topic: usury. Here in Virginia, the payday loan lobbyists are hitting the airwaves (TV and radio) hard, asking voters to allow them to flourish.
I snicker every time I see it. Payday lenders get away with charging more interest than loan sharks. And they prey on soldiers. How is the legality for payday lenders even up for debate?
I watched a jeweler/loan shark in my area get hard time for charging 75% vig on his “loans.” If he were a payday lender, he’d be a cheap one. Most payday lenders can get away with almost ten times that.
The only difference between a loan shark and a payday lender is the threat of violence – and the fact that the loan shark is probably cheaper in the long run.
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Lester, I’m in VA too, and have noticed the ads. They just warm the heart, don’t they?
Are you familiar with the particular piece of legislation they’re lobbying for or against?
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Wow.
Only took 6 posts to actually address the topic.
Yeah, I’ll agree with Jon, even speaking as probably the loan liberal in this group, I’m fine with people paying and being charged interest. I work for a bank, it’s how we make our money, and it’s win-win most of the time.
But these payday loans – the companies that do them are mostly bottom feeders, pure and simple. Same with the flippers and the whole sub-prime mess that’s been created. They take advantage of the least financially knowledgable, and most financially vulnerable people in our societ. There oughta be a law, it should be enforced, and I really have a hard time seeing where we as Christians would be against laws cracking down on this.
We’re supposed to defend and speak up for those with less power, aren’t we? Did I miss where we aren’t charged with doing that.
Has nothing at all to do with opposing abortion, either. That’s just a ridiculous conflating of two separate issues, and I’d call out Mother Jones on that one, although their point on predatory lenders stands.
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Well I guess I’ll take a stab at the flip side. Most neighborhoods inundated with payday loan establishments have systemic problems beyond just payday loans. To single out payday loans as being the biggest problem in these neighborhoods is deflecting the addressing of the bigger picture.
To suggest that Christians are somehow majorly responsible as the result of a sin of omission is humorous. The breakdown happened long before payday loans companies became a part of the problem.
That is not lacking compassion, that is drawing attention to the real issues of poverty. I’ll challenge anyone to do a thorough study of just the book of Proverbs and what it has to say about poverty and your eyes will be opened wide.
Personal irresponsibility (go ahead accuse me of blaming the victim) is at the heart of why payday loans proliferate.
I grew up in many of those types of neighborhoods and spent the greater part of my Christian ministry years laboring there. The solution goes beyond closing the payday loan establishments and may not even start there. In a warped kind of way, they provide a service to the community that many banks, savings and loans, and credit unions choose to ignore.
You kill a weed by killing the roots, not by plucking the leaves.
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Metatonia – I’ll bite. Maybe the problem isn’t the payday lenders, but the poor slobs who take their loans, often without reading the fine print.
However, why can’t the payday lenders charge more reasonable rates, maybe at the rates bank charge?
Wait, I know. They target persons who have a high rate of nonpayment. They need to charge more interest to make money.
Maybe, but I’ve seen plenty of studies showing that the higher chance of nonpayment doesn’t necessitate such exorbitant interest rates.
But, let’s just say that the feds outlawed those payday lenders. Would the poor be that worse off? You say they “provide a service.”
Do they?
Do the poor really need a quick loan to cover a car payment, or some other want (rather than need)?
Let’s face it, people don’t go to payday lenders for education loans or mortgages. They might need the money to make rent because they blew it on some frivolity.
In other words, there is really no service, in my mind, that these payday lenders are providing. Besides, people or entities that provide a beneficial service usually don’t have to target a susceptible population and leave the gory details of their service in the fine print.
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John Rowe says: “However, the Bible forbids usury — that is the charging of ANY interest on loans”
That’s not true. The bible does not forbid charging interest. All charging of interest is “usury.” If Jewish society believed that it was forbidden, there would be no such thing as debtor’s prison because no one would take the risk to loan to someone. In regards to helping out a brother who is in financial difficulties, we are called to not profit from it. Some think it means we should not expect the loan to be returned at all, but that’s wrong as well.
See Exodus 22:25: “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.”
Regarding PayDay lenders, perhaps the borrowers should take a lesson from scripture to avoid debts if at all possible. No one is making them go to these bottom feeders. Are the payday lenders supposed to assess whether or not these people are poor?
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The way the market works, poor folks get charged a higher rate of interest (rich people a lesser) because poor people tend to have worse credit and consequently are greater risks.
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The following is an interesting article that explores church history of usury and makes a parallel with homosexuality.
http://www.indegayforum.org/news/show/26725.html
Wiglaf’s point is a non-sequitur. You can make a loan to someone and simply not charge any interest on it (as the Islamic world currently does). Indeed, that someone might face prison for welching on an interest free loan is a pretty good incentive to pay it back.
I believe the Islamic world works through fees, but not interest, btw.
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Jon Rowe, you’re right about Islam, no interest.
I have the same question Lester has. I’d like to know how payday lenders provide a service. I’ve always thought loan sharks and payday lenders are fundamentally the same and feed off people, so I don’t understand what good can come from either.
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Rowe’s also right about the Bible – it forbids interest. Even Wiglaf, in his post saying the Bible doesn’t forbid charging interest, quotes a verse from the Bible forbidding charging interest.
Payday lenders are scum, IMO, but apparently the people borrowing money from them think they provide a service. I’m not aware of any payday lenders that force people at gunpoint to borrow from them. So apparently there’s a real need; it’s just that the payday lenders are charging an unconscionable price for meeting that need.
It seems to me that this area is a real opportunity for the evangelical Church to put her money where her mouth is. I’ve heard many evvies say that if the church were doing her job, there would be no need for welfare, etc. Now more and more of them are saying that it’s sinful to charge high interest rates to poor people for micro loans. Well, why doesn’t the church start making these small, short term loans to poor people at no interest, like the Bible commands?
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I’m gonna try posting this again…
Rowe’s also right about the Bible – it forbids interest. Even Wiglaf, in his post saying the Bible doesn’t forbid charging interest, quotes a verse from the Bible forbidding charging interest.
Payday lenders are scum, IMO, but apparently the people borrowing money from them think they provide a service. I’m not aware of any payday lenders that force people at gunpoint to borrow from them. So apparently there’s a real need; it’s just that the payday lenders are charging an unconscionable price for meeting that need.
It seems to me that this area is a real opportunity for the evangelical Church to put her money where her mouth is. I’ve heard many evvies say that if the church were doing her job, there would be no need for welfare, etc. Now more and more of them are saying that it’s sinful to charge high interest rates to poor people for micro loans. Well, why doesn’t the church start making these small, short term loans to poor people at no interest, like the Bible commands?
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John Rowe,
Hardly a non sequitur. In the business world, you don’t loan money for free. The church, however, should not be in the business of usury as a charitable organization. Nor should you if you loan to someone in financially difficult times.
Also, John Rowe, my point was that the bible does NOT say usury (the charging of interest) is forbidden. That’s hardly a non sequitur either. It simply says, don’t be a usurer to a poor person. It doesn’t say usury is a horrible evil that must be purged from the land. Obviously, business thrives where people with money invest through lending to others who run businesses. These payday lenders are not, by definition, lending to people who run businesses. These people are not even necessarily poor. They just make really bad financial decisions. The bible has plenty to say against the borrower for stupidity as it does to lenders for greed.
The islamic world is essentially charging interest if they charge “fees”. It’s their way of getting around their religious law in order to allow for an economic necessity.
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Night Train, why don’t READ instead of ASSUME:
“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.”
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Well, why doesn’t the church start making these small, short term loans to poor people at no interest, like the Bible commands?
That’s a good question. There are church and para-church organizations who do that kind of thing. There aren’t enough yet though. Some even require financial counseling as part of the deal in certain circumstances. This way it allows the lender(or giver) to hold the borrower/receiver accountable. After all, it sort of defeats the purpose to help someone in need if they keep putting themselves in that situation through foolish choices. We already have an organization that does that; it’s called government.
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Finally, I don’t think the bible is calling for civil sanctions against someone who applies usury to the poor. Some things are morally wrong and some things the bible calls civil sanctions against. The government should really keep its nose out of this. If there’s a demand, people will find a way to provide a supply even if it’s illegal.
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payday loans are no longer a feature in poverty stricken neighborhoods only. My upper middle class small town has one as does the student neighborhood near the university. Two social groups which could with discipline do without short term loans.
In many cases, banks do a poor job of advertising their services. Many payday offices cash cheques including social assistance for a huge fee — by law banks must cash welfare cheques for free and the gov’t prefers welfare receipts have direct deposit. Banks are not used to competition and need to realize they must advertise their services.
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Habitat for Humanity is one of many organizations, with a Christian foundation, trying to help the poor get their needs met legitimately.
I think these high-interest-loan businesses should be illegal; they’re basically legal scams to people who don’t know basic math. I’m in favor of the free market, but believe that predatory businesses don’t belong in it. Laws against deliberately harming the poor are perfectly legitimate.
Next stop: the lottery.
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And when interest rates match the inflation rate can it be properly called usury? At 3.5% Canadian prime is only .5-1% above the inflation rate. For me this means a 5.25% mortgage. At only 2.25% above inflation I have a hard time regarding this as usury especially housing values in the Greater Toronto Area continue to out pace inflation.
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Have these nitwits never heard of Dave Ramsey? His ministry has been skewering payday loan places for 20 years.
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From a purely practical standpoint, just stay away from these high interest loans. Limit the # of your credit cards and pay your balance off every month. I know easier said than done; but you if do, you will find it much easier to accumulate wealth. Some folks (I know one of them intimately well) just don’t care. I constantly give him the “right” advice. And he “constantly” doesn’t follow it. Should government really protect people from themselves who insist on shooting themselves in the foot? As a libertarian, I say no.
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I agree that the analogy to abortion is weak. A better analogy is to Christian opposition to gambling and the lottery. I see little moral difference between enticing the poor to spend their limited resources on lottery tickets and enticing them to take on debt on burdensome terms that will subsume them.
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#23
John M,
There are a lot of people, nitwits and otherwise, who have never heard of Dave Ramsey. I never heard of him until a year ago, and then only because our church was hosting a Financial Peace University class.
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I have noticed that payday loan outfits crop up near military bases.
Commanders can and should put payday lending places off limits. They do this regularly with fraudulent businesses or places like strip joints, drug paraphrenalia shops or gay bars.
What’s the old saying about a fool and his money??
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Around here, all the “payday” loan places are in the poor neighborhoods. That basically tells me they are predatory. They should be held to a sensible interest rate if they are going to be allowed to exist at all.
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Well done WIGLAF at #11, #17-20),
Christians who study the Bible and try to live by the spirit of Christ understand that the ‘letter of the law’ can kill but the Spirit gives life. That’s the Bible’s teaching–2 Cor. 3:6. So we tend not to make blanket statements about what is forbidden for all humanity today based on proof texts from the Old Testament. We don’t ignore such passages, but we look for New Testament passages and principles to confirm it and we keep the spirit of the law in mind. We know that the spirit of the law calls us to a HIGHER standard of morality than the letter of the law ever could.
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Lester #10 – Sorry it took me so long to respond. My computer has been having conniptions. This will be a longer post than normal just in case my computer acts up again.
Whilst working with lower income people for years I came to the conclusion and tried to do something about the fact that people generally do not know how money works. While this is true among middle and upper class people as well, it is especially devastating to the poor.
Poor folks often are underemployed (lack of education, lack of transportation, lack of skills, poor life choices) and as a result don’t have access to well paying jobs.
In a society that has so much pressure to live a certain lifestyle, it erodes a persons resolve to live within their means. While middle and upper income people can get away with a certain degree of money mismanagement because they have a cushion between what their basic needs mandate and the amount of money they make, poor people do not have any cushion but the level of temptation is much the same.
The rate of default on these payday loans are very high. Even though the market will eventually balance itself as more of these institutions open up, I suspect that the charged interest will still be higher than what a client can find at a bank or credit union.
One more thing, do a tour of some of these neighborhoods and you will be confronted with an absence of banks, large grocery stores, WalMarts, Home Depots etc. That’s why I said that in a “warped sort of way they provide a service.”
This lack of big box stores is often being addressed by Korean and Arab small shop owners who are willing to take the risk but charge very high prices for basic commodities. Milk, bread and eggs can be as much as 50% higher because the big box stores don’t want to deal with the liabilities of servicing those communities. And in a “warped sort of way”, these Koreans and Arabs provide a “service” to the commmunity. Where else are you going to get milk, bread and eggs?
That’s why I said that it is part of the systemic dysfunction found in these poor neighborhoods and to isolate only one area as the “key” is to ignore the other parts of the system that contribute to the whole problem.
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Usury is defined as imposing excessive interest. The charging of interest itself is not forbidden in Scripture. Note the parable of the talents in which the wicked servant buried his talent instead of investing (a form of lendng) it at interest. We all seem to agree that it is morally objectionable to exploit people in great need.
The Exodus passage forbids usury against poor people who are part of God’s covenant with Abraham’s descendents. Note the qualifiers: “any of my people that is poor.” NT, that means if you are not charging excessive interest to an impoverished Old Testament Jew, you are not violating any explicit biblical command. WIGLAF was correct. However objectional the practice in principle, the determination of whether a specific transaction is usurious is subjective and context dependent.
For me the issue with this report, as I argued in my prior post, is that the correlation between predatory lending and Christian influence that “Mother Jones” is asserting is created by a disingenuous statistical “cooking of the books”.
““We can be 99% sure that about 56% of the time when the Christian Power goes up, then payday lending per capita also rises.”
This precise sounding percentage rate for something as amorphous as “Christian power” traps the unwary into thinking some definitive statistical finding lends weight to their assertion.
“There are three kinds of lies: lies, damned lies, and statsitics!” variously attributed to Mark Twain, Benjamin Disraeli
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Actually, Ken, the biblical definition of usury is charging any interest. If you look up the hebrew word for “usurer” in the Exodus passage, it’s “nashah”, meaning a creditor or lender on security or interest. In fact, if you consider the context, it’s fairly clear that a usurer is one who charges interest – not excessive interest. In modern times, it’s been redefined to mean excessive interest. So, charging any interest to the poor would be usury. I think this applies to charitable organizations and individuals lending and not to businesses.
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Here in Georgia, payday lenders were banned several years ago. Actually, the high rates of interest, rolling of loans, etc. were outlawed, which caused the payday lenders to close up shop and move elsewhere.
However, the Republican Party in Georgia (where conservative Christians are a major force if not the controlling factor), have been trying mightily to make them legal again.
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This is not an issue that I had previously thought about. This is actually pretty ironic–the Jews get scattered and crushed in 70 AD, spread out all over the place, and proceed to dominate European banking and generally rack up a mostly undeserved reputation for being swindlers. Now, the Christians, having generally loathed Jews for the better part of 2000 years, start to do the same thing.
On the other hand, I am well acquainted with the abuse of power in the organized church.
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Some comments have been made about those in poverty going to payday lenders out of “need”. This is only true for some. Those in “poverty” struggle just like the rich with materialism so much of it is “want” not need. I do delivery work in poor neighborhoods and the streets are lined with cars with fancy tires. I know they have lots of TV’s and a cable bill. Are these needs? Hardly. Next week I’m going to Mexico with a group of believers to build 19 houses for folks who are in real poverty. The American poor have money, they just have poor spending habits, along with other bad habits. I would say many (not all} are going to payday lenders because they can’t wait to fulfill their material addictions.
If Mother Jones is right about their point, God will judge the believers who are involved in this, if indeed they are believers. The church is full of “tares” – weeds that look like wheat. They will not be sorted out till the end of the age.
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Actually Tima, I would argue that having a small TV and basic cable is a need, especially after TV goes all digital next year (at which time, older TVs will no longer be able to get a signal over the air and you’ll have to have either a newer digital TV or a converter box to get any signal at all.)
TV isn’t just for entertainment, it’s also a valuable conduit for information (and entertainment isn’t out of bounds either … humans need it.)
If a poor family has a couple of 23-inch sets and a basic digital cable account, I’m not going to fault them. On the other hand, if they’re spending their money on a 50-inch LCD screen and signing up for the most expensive cable packages and then complaining about food and shelter costs, that’s their own fault.
But payroll lenders are still vermin no matter what. They target the most vulnerable, who are usually less educated and may not understand what they’re signing up for, and charge them exhorbitant interest. That’s wrong no matter what.
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I don’t know about TVs and cable being necessities, but I don’t comment on a poor family having whatever they want as long as they don’t go in debt or neglect real necessities to do it. That’s really the root of the problem. People have forgotten how to live debt-free and delay gratification until they can afford to pay cash. These payroll lenders are bilking people out of a lot of money, but unfortunately they are in business and proliferating because there is a demand for their “service”. The states should set a limit on interest rates, but the real problem is deeper than that.
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