April 13, 2016
Katie Thompson, firstname.lastname@example.org (Center for Public Justice)
Faith leaders release research on ‘harmful’ and ‘predatory’ payday loans
WASHINGTON, D.C.— Faith for Just Lending (FJL), a diverse coalition of faith-based organizations, announced today the results of new polling from LifeWay Research on payday lending along with a new report titled The Collateral Consequences of Payday Loan Debt, which detail the experiences of congregations and borrowers with payday and car-title loans.
The LifeWay survey of 1,000 Christians in 30 states that allow high-cost loans found that payday lending is widely viewed and experienced negatively. The most common characteristics used to describe payday loans were “expensive,” “harmful,” and “predatory.” The coalition’s report echoed the findings of clergy and faith-based social service providers who overwhelmingly describe payday loans as “harmful” rather than “helpful” and frequently cite a long-term cycle of debt resulting from payday loans.
Christians also overwhelmingly support laws or regulations to protect borrowers from loans with exorbitant interest or that cannot be repaid. LifeWay found that 86 percent of Christians affirm that laws or regulations should prohibit lending at excessive interest rates and 94 percent agreed that lenders should only extend loans at reasonable interest rates based on ability to repay. These findings echo previous polling that demonstrated strong support for regulations on payday lending across party lines. The survey also found that African-Americans are the most likely to have obtained a payday loan (49 percent) and to know personally someone who has obtained a payday loan (58 percent).
Lending—a financial activity—must operate within moral and ethical boundaries. According to LifeWay, 77 percent of Christians and 85 percent of evangelicals believe it is a sin to loan someone money in a way that the lender gains by harming the borrower financially.
Payday loans can result in a long-term cycle of debt, family stress and shame, according to experiences shared with FJL by clergy and church members. The FJL report discovered that faith leaders who knew people with payday loans witnessed the devastating financial impact of these loans and many other negative consequences. Nearly 90 percent indicated that payday loans “mostly hurt” borrowers, 84 percent observed that borrowers remain in debt to a payday or car-title lender longer than expected, and 84 percent witnessed an increased need for emergency assistance by payday borrowers.
Stephen Reeves, associate coordinator for partnerships and advocacy of the Cooperative Baptist Fellowship, said that the LifeWay Research poll and FJL report serve as confirmation that debt-trap realities of payday lending and urged responsible legal reforms.
“These findings confirm that the attitudes and experiences of Cooperative Baptist church members and pastors are shared by Christians across the country,” Reeves said. “The payday lending business model is widely considered harmful and sinful. People of faith across a wide spectrum of beliefs are unified in their call for reform. It is time for lawmakers and regulators to step up, listen to the voice of the people so often drowned out by industry money and political influence, and enact fair and responsible boundaries for these predatory products.”
Rev. Sèkinah Hamlin, director of the Ecumenical Poverty Initiative in Washington, D.C., emphasized that people of faith will continue to fight for just lending practices.
“As people of faith, we will continue to fight for just lending practices for God’s people,” Hamlin said. “It makes no sense and is really a sin for children and families to be caught in a destructive cycle of debt simply because they are trying to make ends meet. Exorbitant annual interest rates of more than 300 percent and unreasonable terms have led to financial devastation for families. We will continue to fight for the financial health and well-being of children and families and lift up our voices against exploitation of financially vulnerable people so that they are able to live with God-given dignity.”
Barrett Duke, vice president for public policy of the Ethics & Religious Liberty Commission of the Southern Baptist Convention, emphasized the importance of protecting those vulnerable to unjust lending practices.
“To enrich oneself by increasing the burden on the poor is shameful,” Duke said. “The Bible speaks clearly in its opposition to usurious lending practices. Those involved in providing financial services to poor and vulnerable people have a moral responsibility to ensure that they are really helping them and not merely profiting from them. To date, there is too much profit and not enough empowerment from those providing payday loans. Regulation of those who will not responsibly regulate themselves is imperative to protect the most vulnerable among us.”
Gordon Martinez, a leader with Faith in Texas of the PICO Network, shared about his personal experience with payday loans.
“Payday loans left me with all my possessions in two plastic tubs,” Martinez said. “I lost everything. I do not want anyone else to have a story like mine. To the payday lending industry, my story represents good, profitable business. It is one thing to make money, but doing so by preying on people in situations like mine is wrong, and it has to stop.”
Members of the Faith for Just Lending coalition steering committee include the Center for Public Justice, Cooperative Baptist Fellowship, Ecumenical Poverty Initiative, Ethics & Religious Liberty Commission of the Southern Baptist Convention, National Association of Evangelicals, National Baptist Convention, USA, Inc., National Latino Evangelical Coalition, the PICO National Network, and the United States Conference of Catholic Bishops.
While representing distinct institutions with different histories and practices, these organizations hold a shared conviction that Scripture speaks to the problem of predatory lending—believing that just lending is a matter of biblical morality and religious concern. In May 2015, the coalition released the following set of principles for just lending:
- 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.
To learn more about Faith for Just Lending, visit www.lendjustly.com.
Elizabeth Bristow, email@example.com (Ethics & Religious Liberty Commission)
Sarah Kropp Brown, firstname.lastname@example.org (National Association of Evangelicals)
Leslie Copeland Tune, email@example.com (Ecumenical Poverty Initiative)
Kawana Lloyd, firstname.lastname@example.org (PICO National Network)
Aaron Weaver, email@example.com (Cooperative Baptist Fellowship)
Jerlen Young-Nelson, firstname.lastname@example.org (National Baptist Convention USA)
Faith for Just Lending is a diverse coalition of faith organizations calling for end to predatory payday lending.