By CBF Advocacy
Stephen Reeves, CBF Associate Coordinator of Partnerships and Advocacy, led a delegation Jan. 22 of national religious leaders to meet with the newly confirmed Director of the Consumer Financial Protection Bureau Kathy Kraninger and several senior officials. The delegation consisted of members of two coalitions, Faith for Just Lending and the Faith & Credit Roundtable.
Included in the delegation were representatives of the Ethics and Religious Liberty Commission of the Southern Baptist Convention, the National Association of Evangelicals, National Baptist Churches, USA, US Conference of Catholic Bishops, Catholic Charities USA, the Center for Public Justice, Faith in Texas, the African Methodist Episcopal Church, Missouri Faith Voices, Faith in Action, The Ecumenical Poverty Initiative, Jubilee USA, Bend the Arch Jewish Action, The Evangelical Lutheran Church in America and The Religious Action Center for Reformed Judaism, among others. These organizations strongly urged Director Kraninger not to repeal or otherwise weaken the small dollar lending rule as proposed in October of 2016.
Mr. Reeves made the following statement to open the meeting:
First, I’d like to say thank you. This group enjoyed a strong relationship with Director Cordray and met with Acting Director Mulvaney on two occasions. We’re hopeful that our perspectives and input will be welcomed under your leadership as well, Director Kraninger and that this is just the beginning of a fruitful relationship.
I’d also like to impress upon you just how rare this group is. To my knowledge, there is no other faith-based coalition that has as broad of membership—spanning the theological and ideological spectrum as these two. We have members of the Christian Faith for Just Lending coalition and the multi-faith Faith & Credit Roundtable and you’ll hear from members of both today.
We’re here first and foremost based on moral conviction. Usury is immoral—no matter what the law or regulations now say. It is wrong to take advantage of someone who is desperate and vulnerable. It is wrong to give someone a loan when the lender knows they have little chance of repaying under the terms given. It is all the more wrong that when the borrower falls into a debt-trap it is the most profitable scenario for the lender.
Second, we’re here because our churches and ministries are where people turn when they’re trapped in debt. They may not know to call a federal agency in Washington to complain of unfair or deceptive treatment, but they’ll turn to their pastor, church or a social service ministry. For example, Catholic Charities in Ft. Worth Texas conducted a survey several years ago and found that 1/3 of those requesting direct cash assistance were currently stuck in a payday or auto title loan. That totaled over $200,000 in one quarter alone. Borrowers are still often too embarrassed to admit to taking out a payday or auto-title loan, but they’ll come for help with a light bill or other necessity they can no longer afford because they’re paying endless interest and fees on a 400% APR loan.
That was the case for Linda in Tennessee whose $400 loan, over a three-year period, ended up costing her over $4,680. And a church member in San Antonio whose initial $700 loan ended up costing over $3,300 in less than five months and was only repaid when the church stepped in to help.
You’ll hear more stories like these today. This is not market theory. This is what is happening in the lives of people we care about and to whom we are called to minister.
Finally, it seems to me, that this entire debate boils down to this – are people who end up in a debt trap – endlessly paying interest and fees that never reduce what they owe, or stuck in a repeated cycle of loans – an unfortunate, uncommon yet unavoidable side effect – as industry members would have you believe – or is this debt trap the heart of the business model and the source of their profit? The CFPB’s own research shows that 75% of all lender fees come from folks with over 11 loans a year and they make up nearly half of all borrowers. I think the intense resistance by industry members to any law or regulation that would attempt to prevent debt-traps tells us all we need to know.
Aside from a firm interest rate cap which I know you are unable to set, assessing a borrower’s ability to repay, standard procedure for most loans, is the best way to prevent a loan from becoming a debt-trap. The small-dollar lending rule is our best hope for preventing debt-trap lending. We’re here today to ask that it not be rescinded, weakened or reconsidered.
All CBF Advocacy resources regarding payday lending advocacy can be found here.
Including a basic educational piece, an explanation of why CBF Advocacy is encouraging work for reform, some basics about the CFPB, a summary of the proposed rule with future advocacy suggestions and the principles of the Faith for Just Lending coalition. You can also read stories about how our Global Missions field personnel and churches are directly and tangibly serving their neighbors who have trapped in predatory loans.