Faith for Just Lending, a new coalition of Christian groups representing different parts of the political spectrum, was formed to advocate for the elimination of unjust lending practices that hurt the poor.
"Payday lending is a form of economic predation and grinds the faces of the poor into the ground," said Russell Moore, president of the Southern Baptist Ethics & Religious Liberty Commission.
"As Christians," he continued, "we are called by Jesus, by the prophets, and by the apostles to care for the poor, individually, and also about the way social and political and corporate structures contribute to the misery of the impoverished. Groups across this diverse coalition don't agree on every issue in the public square, but I am happy to work together on this issue to stand against unchecked usury and work for economic justice, human dignity and family stability."
Besides the ERLC, the coalition includes the Center for Public Justice, Cooperative Baptist Fellowship, Ecumenical Poverty Initiative, National Association of Evangelicals, National Baptist Convention USA, National Latino Evangelical Coalition, and Pico National Network.
There are 20,000 payday and car title loan stores nationwide and many of them offer loans at 300 percent APR, according to a Faith for Just Lending press release. Poor families that use these services can easily become trapped in a cycle of debt.
Chad Chaddick, pastor of Northeast Baptist Church in San Antonio, recalled one family that took out a $700 loan from a payday lender. Before the church stepped in to help, the family was paying $200 per month, which was not enough to reduce the loan's principle. The loan ended up costing $3,300.
Faith for Just Lending's four principles are aimed at individuals who could be targets of unjust lending practices, churches, lenders and the government.
Those principles state:
- 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.
"Every day clients walk into my office with tears in their eyes and defeat in their hearts," said Claudette M. Humphrey, project director for Catholic Charities of Northern Kansas. "Predatory lending has brought them to me on the brink of homelessness, the brink of financial ruin, even the brink of suicide. Predatory lenders are destroying lives. I see it every day and there was a time, not long ago, I lived it. We must rise up and declare in one united voice: No more."
Galen Carey, NAE's vice president for Government Relations, encouraged lawmakers to pass regulations that recognize the difference between legitimate, honorable lending practices and abusive practices that ensnare "vulnerable people in debt traps."
"We need just laws and regulations that meet legitimate needs while preventing the egregious abuses that are now committed by too many payday lenders," he said.